It’s Always a Good Time to Prepare for Your Financial Future
Whether you’re just starting out in life, or enjoying the finer points of retirement, the importance of estate planning is clear. We find it an essential financial strategy to plan for your needs, protect your loved ones, and prepare for the future.
There are many common misconceptions when it comes to estate planning. Many people believe estate planning is just for the wealthy or think it only benefits people who are 65-plus. These misunderstandings couldn’t be further from the truth. No matter which stage of life you find yourself in, there are significant benefits to planning ahead and putting your wishes into action.
The importance of estate planning is universal, but there are certainly different strategies to consider for different age groups. For example, a 20-something just beginning their career would likely have to plan differently than a retiree making decisions to manage the fruits of their lifelong labor.
What you need should be based on your age, but also on your personal financial situation, needs, and goals. Here’s some information about estate planning based on your phase of life that we hope will help you on this path.
The College Years
There’s a lot to think about in college—classes, extracurriculars, friends, and your future career prospects. Estate planning may not feel like it belongs on that list but being prepared early is a great way to make sure you’re ready for the unexpected.
Whether you’re gearing up for graduation or you’ve just begun your post-collegiate career, we suggest implementing a few basic documents to get started on your estate plan:
- I will and update beneficiaries on all accounts
- Durable Power of Attorney (POA) for healthcare
- Durable Power of Attorney (POA) for finances
In our experience, setting up the POAs can be the single best thing you can do at this age. These critical documents give an appointed person, usually a parent or loved one, the ability to manage your finances and make medical decisions on your behalf if you’re unable to do so. Paired with a will, these documents provide a solid foundation for your future.
Writing a will can seem overwhelming, but it doesn’t have to be. Your will is important if you have any significant assets like any stocks or savings accounts, but it also can save your loved ones from added strife during a difficult time, by outlining exactly what should be done with your assets so that your loved ones aren’t left trying to decide.
Marriage or Partnership
Getting married or finding a serious partner is certainly cause for celebration! It also causes for revising your estate plan. Joining your life with another person adds a layer of complexity to your finances. Many people want to care for their partner during an emergency, and vice versa. Without a solid estate plan, you may find that you are unable to access your partner’s medical information or make decisions on their behalf. Here are some documents you would consider implementing when you are in a serious partnership:
- Durable Power of Attorney for healthcare
- Durable Power of Attorney for finances
- Your will
- Securing life insurance and/or selecting a beneficiary
- An advance directive (sometimes called a living will)
- Updated beneficiaries on all of your accounts
There’s not necessarily a need to dismiss everything you did earlier in life—you can often build on your existing strategies and adjust to reflect the importance of your partnership. The focus of this stage of life is to financially protect your loved ones if something unexpected occurs. You’ll also want to make sure they have the authority they need to make decisions if you’re incapacitated.
An advance directive or living will is one way to make sure of that. It outlines how you would like your medical care to be handled if you’re unable to make decisions yourself. It also gives your loved ones comfort knowing that they can make decisions that align with what you would have wanted for yourself.
Purchasing a life insurance policy at this stage can be a great idea if you haven’t done so already. Those funds can protect your spouse or partner if you pass away, providing a financial cushion to help ease the pain of losing a loved one. If you already have a policy, make sure to update it to reflect your partner as a beneficiary if those are your wishes.
Starting Your Family
If you’ve made room in your life and home for a little bundle of joy, it’s time to make room in your estate plan as well! A baby is a common impetus for many people to organize their financial affairs. Whether you’re starting from scratch or building on what you’ve already established, here’s what we suggest you consider:
- Durable Power of Attorney for healthcare
- Durable Power of Attorney for finances
- Your will
- Securing life insurance and/or selecting a beneficiary
- An advance directive
- Updated beneficiaries on all of your accounts
- Choosing a guardian for your child
This list covers the basics, but it adds some additional considerations for the next generation, including how your child will be taken care of should something happen to you and your partner. Often, one of the biggest changes is increasing your life insurance to help make sure your family is provided for in your absence.
It’s also critical that you think about who you would like to be your child’s guardian. A guardian will manage your children’s finances until they are legal adults and help raise them in the event that you and your partner pass away or are incapacitated.
Protecting Your Legacy
At its core, an estate plan is your opportunity to leave a lasting legacy. Having a plan in place that keeps your loved ones protected and cared for through your life and beyond is one of the biggest gifts you can possibly give.
What’s the best way to go about it? Well, you’ll want to help your heirs avoid probate, which can be a long and expensive legal process in which your estate must be evaluated by the courts. They’ll review your will, your assets, and debt, and distribute your estate accordingly. This process can take years depending on the complexity of the estate, which means the funds your family needs might not be available when they need them. Trusts and other estate planning techniques can help you avoid probate, but these strategies take time to properly implement. If you want to keep your legacy protected from the unnecessary costs of probate, we suggest starting your estate plan early.
The Importance of Estate Planning
No matter how you envision the legacy you want to leave behind, estate planning is a sound way to bring your wishes to fruition. Regardless of the stage of life, you’re currently enjoying, now is the perfect time to get your plans in order and make sure your loved ones are protected.
If you’d like professional assistance in this process, we can help! At Aviance Capital Partners, we provide personalized wealth advice for you and your family. Reach out to us today to learn more about our services and learn whether we may be the right fit for your wealth planning needs.
Aviance Capital Partners, LLC (“ACP”) is an SEC-registered investment adviser located in Naples, Florida. Registration as an investment adviser is not an endorsement by securities regulators and does not imply that ACP has attained a certain level of skill, training, or ability. While information presented is believed to be factual and up-to-date, ACP does not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. Not all services will be appropriate or necessary for all clients, and the potential value and benefit of the ACP’s services will vary based upon the client’s individual investment, financial, and tax circumstances. The effectiveness and potential success of an estate planning strategy, tax strategy, investment strategy, and financial plan depends on a variety of factors, including but not limited to the manner and timing of implementation, coordination with the client and the client’s other engaged professionals, and market conditions. This should not be construed as specific estate planning, investment, financial planning or tax advice tailored to an individual reader. ACP suggests that readers consult a financial professional, attorney or tax advisory professional about their specific financial, legal or tax situation. Past performance does not guarantee future results. All investment strategies have the potential for profit or loss, and different investments and types of investments involve varying degrees of risk. There can be no assurance that the future performance of any specific investment or investment strategy, including those undertaken or recommended by ACP, will be profitable or equal any historical performance level. Additional information about ACP, including its Form ADV Part 2A describing its services, fees, and applicable conflicts of interest and its Form CRS is available upon request and at https://adviserinfo.sec.gov/firm/summary/146597
