One crucial topic that nobody likes to talk about is estate planning. Well, everyone exempt estate lawyers. But the truth of the matter is you will eventually die whether you want to or not. And it is better to plan for it in advance since you never know what can happen in life.
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You do not want to leave your family in a financial mess after you leave, do you? An estate plan can, therefore, be one of the best things you can do for your family. By creating an estate plan, you designate who will receive your property and handle your duties when you become incapacitated or after you die.
Some Steps in an Estate Plan That Can Help you Protect Your Loved Ones
Create a will
It is always hard for a family to handle the death of a member. It becomes even more troublesome when you add the burden of dealing with the remaining estate. To safeguard them from this, you need to create a will. A will helps you determine the beneficiary of your estate.
After your die, your heirs may have a hard time taking ownership of your property, especially if there is a relative that wants to have a share. A will helps to prevent such situations by making sure that your estate goes to whoever you intend.
When you die without leaving a will, the intestate laws will kick in and take charge of leaving your estate. Sometimes, when this happens, the beneficiary you intend to give your property may not always be the one that inherits.
Your estate may also go through the probate court, a process that can be very long and costly for your family to bear.
Take out a life insurance
By taking out life insurance, you can ensure that your family does not suffer from financial problems when you are not around. Your family will receive a death benefit that they can use to help clear your funeral costs, mortgage debt, and any other monthly bills. The amount your family receives is tax-free.
There are two basic types of insurance that you can choose to take out. Term life insurance provides your family protection for a specified period before it comes to an end. You are the one that determines the period of coverage. Permanent life insurance, on the other hand, does not run out, provided you keep paying the premium. It guarantees that your family will receive protection no matter when you die.
You can incorporate your life insurance in your estate plan by creating a life insurance trust. A life insurance trust helps you to secure the proceeds of a life insurance policy for the benefit of the beneficiary. The trust removes the insurance policy from your assets during the calculation of the state and federal taxes.
By creating a will and taking out a life insurance policy, you can guarantee that your loved ones will receive financial protection in the event of your death. While preparing for your death is essential, you should always have your safety in mind. Death or incapacitate can happen at any time. By keeping yourself safe, you can get to spend more time with your loved ones.