Thinking about your own passing may not be a pleasant exercise, but it’s an important one, especially if you have children or other dependents who rely on you for support. That’s why estate planning is such a critical component in any comprehensive financial plan.

Your estate plan provides written, legal instructions to your heirs, beneficiaries and financial custodians on how to manage your assets after you pass away. You can use your estate plan to provide support for your loved ones, leave gifts to friends and family—or even to donate to a favorite cause.

Even if you already have an estate plan, it’s possible that you’ve overlooked important items. Below are a few items that people often fail to address in their estate plans. Have you overlooked these planning items? If so, now may be the time to take action.

 

You don’t have a will.

A will is one of the most effective and powerful estate planning documents at your disposal. It’s also one of the simplest to implement. Unfortunately, nearly 60 percent of Americans don’t have a will.1

A will provides specific instructions to your heirs and estate executor on how your assets should be distributed. It can also be used to dictate who should care for your minor children. Wills are helpful because they minimize conflict and confusion in the weeks and months after your passing.

If you pass away without a will, your estate is considered intestate. That means the courts will decide what should happen to your assets and who should care for your children. The court may make decisions that are contrary to your wishes. You can avoid this risk by working with an estate planning professional to create a will.

 

You don’t have enough life insurance.

Life insurance is a powerful financial tool that provides a tax-free lump-sum amount of money to your beneficiaries after you pass away. Your loved ones can use the money to pay for your final expenses, eliminate debt or simply support themselves as they adjust to life without you.

Almost 40 percent of Americans don’t have life insurance, and, of those who do, 40 percent don’t think they have enough. Of those who don’t have coverage, 83 percent believe it’s too expensive.2

The truth, though, is that life insurance is affordable for many people. That’s especially true if you purchase term insurance, which provides temporary protection during the times you need it most, such as when you have minor children in the home. Work with your financial professional to find the right coverage for your needs and budget.

 

You haven’t checked your beneficiaries recently.

You probably have accounts that have beneficiary designations. These accounts include things such as insurance, annuities, 401(k) plans, IRAs and more. Accounts with beneficiary designations aren’t controlled by your will. Instead, the beneficiary simply fills out paperwork and receives the benefit directly.

This distinction is important. If you have the wrong person as beneficiary on an account, they’ll likely get the funds after your death, even if your will specifies that the money should go to someone else. For example, you may have a former spouse inadvertently left as beneficiary on your life insurance or 401(k). If you pass away without making a change, they’ll be entitled to the assets.

Take time each year to review all your beneficiary designations and make sure they’re up to date. Also, if you have minor children, consider setting up a trust to serve as beneficiary on their behalf. Many life insurance companies and other institutions are reluctant to pay benefits directly to children.

Ready to address the gaps in your estate plan? Let’s talk about it. Contact us today at Jim Lee Financial. We can help you analyze your needs and implement a plan. Let’s connect soon and start the conversation.

 

 

1https://www.aarp.org/money/investing/info-2017/half-of-adults-do-not-have-wills.html

2https://www.thinkadvisor.com/2013/08/30/the-shocking-statistics-behind-the-life-insurance/

 

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