Estate Planning - How A Financial Advisor Can Help

Estate planning - preparing a plan to administer and transfer one's assets at death

to chosen beneficiaries - is a concept that many may find both overwhelming and distant. However, it is an important matter that deserves some consideration, no matter your age or income level. This matter is so complex that it is highly advisable to seek the advice of professionals for creating the best plan possible.

Most people think of estate planning as a matter for attorneys, involving legal documents such as wills. This is certainly an important component, but there is a complex financial planning side to administering one's estate that should not be overlooked. Laws in every state vary tremendously, and are difficult to navigate on one's own. A professional financial advisor can be an enormous asset, helping estates to avoid probate as well as take full advantage of ways to save on taxes. In addition, advisors can offer solid advice regarding life insurance, trusts and other investments meant to benefit loved ones and replace your income after you pass on.

Clearly, estate planning isn't a one-size-fits-all matter. The concerns of a young couple with children will be vastly different from a person who just retired, but both can benefit from a financial advisor's knowledge. For the young couple, the advisor can help to make sure that both parents have the correct amount of life insurance coverage. This matter is critical, as it is often the case that, should one partner meet an untimely death, the other will not be able to take care of all expenses alone. Life insurance can help to replace income, pay off a mortgage and take care of other financially important matters such as childcare. Your advisor may also recommend other long term investments or a college trust to ensure the children can afford higher education when the time comes.

The individual entering retirement will probably have amassed far more assets than the young couple. Ensuring these can be passed on to beneficiaries while being minimally impacted by taxes is the financial advisor's realm of expertise. Many people may wish to set up a revocable living trust to ensure they have maximum control over transferring their wealth to beneficiaries, while still minimizing taxes and reducing the odds of probate.

It's important to note that an estate plan, once established, isn't good forever. As you age and your assets and your family change, the strategy you have established will become increasingly out of date. Having or adopting children, getting married or divorced, inheriting money from friends or family, or even moving to another state can necessitate re-evaluation of your existing plan. Moreover, state and federal laws do change from time to time. Reviewing your estate plan with a financial advisor at least once every few years, as well as after major life changes like the ones listed above, can help you keep it updated and relevant to your current situation.

Due to the ever-changing nature of assets and families, and the complexity of tax and other laws, the advice of an experienced and knowledgeable financial planner is indispensable when creating an estate plan. A solid strategy will help ensure that your loved ones will be financially secure, and this certainty can grant great peace of mind.

by: Stephen Daniels

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