Are you starting to think about your legacy and how you’ll pass it on to the next generation? It’s never fun to think about your own death. However, it’s too important to ignore. You may have a substantial amount of assets that you want to distribute to loved ones. You may have a spouse, children or other family members who are dependent on you for support. You might even own a business that could face hardship after your death.
All these issues require some level of estate planning. If you fail to develop a robust estate plan, you could leave your loved ones, business partners and others in a difficult financial situation.
Do you have a bucket list for retirement? If you’re not familiar, a bucket list includes all the things you want to do before you “kick the bucket.” Your list may include things like traveling the world, pursuing a new hobby or visiting friends and family.
Of course, to check every box on your bucket list, you’ll need to have a strong financial foundation as you enter retirement. That’s why you may want to create a preretirement bucket list that includes all the financial milestones you want to meet before you stop working.
A will is often the cornerstone of any estate plan. A will is a document spelling out exactly which of your assets should go to which heirs. It’s an effective way for you to express your estate planning goals and wishes to your loved ones and to your local probate court.
Wills are often straightforward documents drafted by an attorney and signed in front of a witness. However, they are fairly simple to create and are relatively affordable.
Will you be prepared if your ability to care for yourself diminishes? The prospect of long-term care is an important consideration for anyone planning an upcoming retirement.
There are many reasons long-term care becomes necessary. Illness, restricted mobility, cognitive decline and increased risk of injury are common challenges that come with aging and can make daily functioning difficult.
When it becomes a struggle to complete basic activities of daily living, such as preparing meals, bathing or getting dressed, you’ll need ongoing assistance that could have considerable cost. If you haven’t planned ahead for this possibility, it could result in severe financial strain or an inability to acquire the level of care you’d prefer.
You’ve worked hard to grow a family, build your career, and establish a legacy. Now it’s time to think about how you can pass those assets on to your loved ones after you pass away. While it may not be pleasant to think about your own death, estate planning is critical to protecting your family and your legacy.
Without an effective estate plan in place, there are any number of issues that can erode your estate and negatively impact your legacy. One of those issues is probate, which is the legal process for settling an estate. It usually involves tasks like filing a tax return, paying debts, liquidating assets, and identifying heirs. It can generate a substantial amount of legal and administrative costs paid directly from your estate.
As you might imagine, those costs can add up. Without a plan in place, you could drain your retirement assets paying for in-home care, assisted living, nursing home care and more. If you don’t have assets to pay for care, you may have to settle for a level of care that doesn’t meet your standards. And if you have a healthy surviving spouse, he or she may be left with few assets after you pass away.
If you are approaching retirement or in the early years of retirement, now may be the time to develop a long-term care funding strategy. If you wait until you actually need care to address the issue, you may find that you have few feasible options available.
Should you live for today or save for the future? That’s the question many face as they develop their financial plans. The conservative and prudent advice is to live on a modest budget today so you have plenty of assets in reserve for future needs, especially after you retire. Commonly accepted wisdom seems to be that you should pinch pennies today in order to enjoy yourself down the road.
However, there’s also the very understandable desire to live for today. There are likely things you want to do in life that would be best enjoyed while you’re young, not in retirement. Also, given the unpredictability of life, there’s no guarantee that you will be able to tick items off your bucket list when you’re older.
Do you have a health savings account, also known as an HSA? You’re not alone. According to a study from America’s Health Insurance Plans (AHIP), nearly 20 million Americans are enrolled in an HSA.1
An HSA can be a valuable tool to help you pay for deductibles, copays and other out-of-pocket health care costs. They can be especially helpful for those emergency costs that you don’t factor into your regular budget.
If you’re like many Americans, you probably use your HSA to pay for short-term, unexpected costs. Your child suffers a sports injury, so you take money out of the HSA to cover the copay. Or you need to buy medicine for an illness, so you use HSA funds to pay for the prescription. There’s nothing wrong with using an HSA as a short-term reserve account for health care costs. In many ways, that’s why HSAs exist.
You probably have unique goals for your legacy and estate. Perhaps you want to help your kids or grandchildren fund their own goals, such as retirement or college. Maybe you want to leave assets to a favorite charity or cause. Or maybe you simply want to provide a safety net and financial security for those who are most important to you.
Most people start their estate planning with the creation of a will. It’s the most basic and fundamental estate planning tool. Your will can provide instructions to your executor and the local court about who should receive your assets after you pass away.
A will can’t do everything, though. Even with a will in place, your estate will still go through probate, which is the legal process for settling one’s estate. During probate, your executor and the local probate court pay all outstanding debts, file a final tax return on your behalf, liquidate assets, notify heirs and much more.
Every business owner has to make an exit at some point. Some owners leave on their own terms, either through retirement or with the sale of the company. Others, though, exit before they’re ready via disability, health issues or even death. While it may not be pleasant to think about the latter category of exits, it’s important to consider what may happen to your business and your family if you pass away.
Estate planning can sometimes be a complicated process, but it can be even more complex if you are a business owner. You have to consider how to compensate your family for your years of investment and hard work. You also may have business partners to think about. And you probably want to create a smooth transition for your employees, customers and other interested parties.
Carstens Financial Group focuses on providing comprehensive asset management, estate planning and life insurance solutions. Allow us to help you secure your financial future.