Estate Planning 101

Estate planning can provide security and direction for the future, and a financial advisor can streamline the process. When it comes to estate planning, selecting the right financial advisor might seem time-consuming, but it can pay off in the long run. Datalign Advisory makes it easy for you by matching you with a financial advisor who is skilled in the areas where you need help. Life events such as marriage and children are excellent reasons to create or revisit an estate plan to ensure that important details and documents are up to date.

Estate Planning 101

Here are a few factors to consider for an estate plan. Once you’ve created an estate plan, be ready to update it as life events occur.

Know Your Goals

One key point in estate planning is to understand your goals. Estate planning considers how you want to divide your assets, as well as how you intend to address legal and financial matters. You can create different types of estate plans to protect your assets during life and after death. An estate plan allows you to plan for personal needs while also preparing for unforeseen events. 

Estimate the Value of Your Estate

Have a rough understanding of the total amount of your assets. Your assets include checking accounts, savings accounts, digital assets, artwork, and other personal property. Totaling assets and liabilities shows you the big picture of your estate. 

Collect Important Documents

One aspect of an estate plan is a will. A will indicates how assets will be distributed after death. In addition, a will sets out legal guardians of and provisions for minor children. Without a will or trust, state rules and regulations dictate how your assets will be distributed. Without the necessary documents, the correct assets and amounts might not go to the intended individuals. 

Although wills are an important document for estate planning, they are not the only document needed. For example, documents such as a trust, living will, and durable power of attorney (POA) are potentially useful to ensure different angles are covered as you age and after you die. For individuals with younger children, documents that indicate guardianship designations would also be suggested as part of an estate plan. 

Choose Beneficiaries

Decide who you would like to include as a beneficiary. A beneficiary is an individual or entity that will receive a designated amount of your assets after you die. It’s common for beneficiaries to receive assets such as cash, property, or artwork. Although a beneficiary does not always need to be directly named in a beneficiary designation, most estate plans name beneficiaries.

Consider Taxes

Taxes play a part in how you’ll structure an estate plan. When creating an estate plan, consider all types of taxes, including income taxes and estate taxes. In the case of high-net-worth estates, estate taxes are potentially hefty amounts that will need to be paid before an individual such as a beneficiary can gain access to the assets provided to them in an estate plan. 

Structure Your Estate Properly

In building your estate plan, think about the benefit of creating trusts or gifting assets to ensure the best uses. The exact process of creating an estate plan should be overseen by professionals such as financial advisors to ensure compliance and comprehension. Companies like Datalign Advisory help you find the right financial advisor to provide a more streamlined approach to the estate planning process. 

 Ask Questions

You will likely have many questions when going through the estate planning process. You may need to confront uncomfortable questions such as how to approach end-of-life care and who to give assets to. However, facing such questions head-on will prove beneficial in the long run and provide your estate with the tools to better withstand future events. 

How to Choose a Financial Advisor

Selecting a financial advisor takes time, so be sure to plan ahead. The process should begin with a rough outline of your financial goals, which will ultimately help you to decide on a financial advisor. When selecting a financial advisor, choose a person who you can talk to comfortably.

Have financial goals in mind: Your objectives concerning your life and financial future should include long-term and short-term goals. 

Understand what services you will need: After creating a list of goals, it will be easier to understand the services you need provided by a financial advisor. 

Research financial advisors: Write up questions and compare the answers to understand how potential financial advisors compare. Businesses such as Datalign Advisory will ask you to fill out a questionnaire that helps match you with a vetted financial advisor who meets your unique needs and preferences. Datalign Advisory provides a comprehensive approach by expediting the process of selecting a financial advisor. 

Examine backgrounds and review credentials: Once you are matched with a possible advisor, delve into their background to ensure that their areas of expertise match your personal needs. Look up their credentials and licenses. 

Speak with one or more advisors: Most advisors offer a complimentary first meeting where you can get a sense if you would like to work together.

Decide: Hire a financial advisor who understands your goals and strives to meet your needs. Take your time deciding on an advisor who will work best for you. 

When Should You Start Estate Planning?

Finding the ideal time to begin estate planning is linked to personal life events and choices. Life events such as becoming a legal adult, opening a savings account, getting married or thinking about retirement are times when you might want to create or reevaluate an estate plan. Remain proactive with estate planning and update formal documents as needed. 

Becoming a Legal Adult: It might seem early to begin estate planning once you become a legal adult, but experts often claim that it is never too early to start. Once you reach legal age, you can make important financial choices. 

Growing a Family: When planning or actively growing a family, life events such as the birth of a child can prove an important reason to revisit documents such as wills and trusts. With each new addition to the family, reevaluate these documents to provide financial security while also addressing major questions such as guardianship.  

Purchasing a Home: Obtaining major assets such as buying a first home can be another important indicator that it’s time to update an estate plan. 

Additional property: The purchase of additional properties such as rental properties should also be included within an estate plan to ensure that it remains properly handled and allocated. Placing properties into an estate plan can expedite the probate process depending on factors such as applicable state laws.

Grandchildren: The birth or arrival of a new grandchild can also cause you to initiate or evaluate an estate plan.

Marriage: Marriage includes the combining of assets. Talk with your partner and consider your long-term and short-term financial goals. Consider speaking with a financial advisor such as the one that could be matched to you by Datalign Advisory.

Divorce: Divorce indicates the separation of assets. It’s recommended to update your estate plan to reflect this life event. 

Frequently Asked Questions

Estate planning can help you reach important goals, and it goes best when done in conjunction with a financial advisor and a legal professional.