For many of us, estate planning is something we know we should do but often manage to postpone until some indefinite time in the future. But, putting off this part of your financial life could mean passing over an opportunity to protect the lifestyle you've worked so hard to create and to dictate your legacy on your terms.
Why you need an estate plan
The primary purpose of estate planning is to ensure that you control how your assets are distributed. Estate planning is also about planning for unexpected events, such as physical and mental impairment, which may place financial strain on your family.
A well-crafted estate plan is likely to have multiple goals:
• To protect your lifestyle
• To provide for your family and others, including charitable organizations that are meaningful to you
• To control distribution of your assets
• To minimize estate taxes
• Your estate planning checklist
Depending on your goals, you may need to consider different tools, resources and strategies to help you develop an estate plan that reflects your priorities. Here are some important documents and services you may need to help protect you and your family in the event of disability:
• A living will is a legal document containing your wishes regarding medical measures that might be taken to prolong your life in case of serious illness or injury.
• A durable power of attorney for health care, also known as a health care proxy, appoints someone you trust to make health care decisions on your behalf if you are unable to do so.
• A durable power of attorney for financial matters gives someone you trust legal authority to make financial decisions on your behalf if you are unable to do so.
• An inventory of important information includes information about your property, bank accounts, insurance policies, employee benefit plans, mortgages and debts. It also includes your estate planning documents and beneficiary designation forms.
• Disability insurance replaces a portion of lost income if illness or injury prevents you from working.
• Long-term care insurance protects against the costs associated with disabilities caused by age and infirmity, such as nursing home care.
Other important documents help to protect your family and your legacy in the event of your death:
• Life insurance provides financial benefits for your loved ones if you pass away. Used strategically, life insurance can also help address your other estate planning objectives, such as reducing the impact of estate taxes.
• A Last Will and Testament is a state-specific legal document that sets forth your wishes regarding the distribution of your property and names the guardian(s) who will care for any of your minor children.
• Trusts may be beneficial or a variety of life events and situations, including tax law changes, marriage, collage saving, a child with special needs, serious illness, inheritance and retirement planning.
The most difficult part of estate planning is getting started. Once you begin, you will find estate planning is a positive and constructive way to put yourself in control of your legacy.
Need help taking the first step? Working with a Financial Advisor can help you bring all the elements of your estate plan together to help ensure that you have an integrated strategy in place to protect yourself and your family.
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Want to talk to Reuben about this or other topics featured in The Economic Blueprint? Please email him at reuben.rashty@morganstanley.com or call him at 248-723-1843. You can also contact Reuben's colleague Kyle Zwiren, J.D. at kyle.zwiren@morganstanley.com or 248-723-1870.
Reuben Rashty is a Managing Director / Financial Advisor with the Wealth Management Division of Morgan Stanley in Bloomfield Hills, Michigan. The information contained in this article is not a solicitation to purchase or sell investments. Any information presented is general in nature and not intended to provide individually tailored investment advice. The strategies and/or investments referenced may not be suitable for all investors as the appropriateness of a particular investment or strategy will depend on an investor's individual circumstances and objectives. Investing involves risks and there is always the potential of losing money when you invest. The views expressed herein are those of the author and may not necessarily reflect the views of Morgan Stanley Smith Barney LLC, Member SIPC, or its affiliates.
