Last week I wrote about health care components of an estate plan that can bring some peace of mind during the current pandemic. Today I will cover important financial components of your estate plan.
Financial Components of an Estate Plan Financial Power of Attorney
With a financial power of attorney, you can choose someone to help with your finances in the event that you become incapacitated and are unable to manage your finances yourself. You can decide how much control you want your power of attorney to have. You may give them power to do things such as access your accounts, sell stock, and manage real estate if you so choose. Make sure to pick someone you trust fully, like your spouse, adult child, or a close friend or family member.
You may want to set up a qualified trust to protect your assets as you pass them down. For example, if you have children or grandchildren who aren’t yet old or mature enough to handle their inheritance, you can set up a trust so that they will receive a small amount of money every year with the amount increasing as they get older. You can also leave money for specific costs such as an adult child’s mortgage, wedding expenses, or student loans. You can also set up a charitable trust to protect your assets until they are distributed to your chosen charities.
One of the biggest mistakes people make in estate planning is forgetting to update their plans and beneficiary designations. Life insurance policies, bank and brokerage accounts, and retirement plans usually all have beneficiary forms which typically override your will. Make sure to update these forms every couple of years as well as after every major life event, such as marriages, divorces, new births, or deaths.
For help creating or updating your estate plan, contact us at Wilson and Wilson Estate Planning and Elder Law, LLC at 708 482 7090 for our main office in LaGrange, Illinois or at 847 656 8958 for our Northbrook, Illinois office.