NEW YORK, NY / ACCESSWIRE / June 17, 2024 / Estate planning is a crucial piece of financial management. It allows you to help give financial security to your loved ones with your hard-earned wealth. However, this can be a significant undertaking. You have to account for all your assets, determine how you'd like to distribute them, and get everything in writing to avoid any issues. This article will dive into four tips to create an estate plan that meets your wishes and allows you to leave the legacy you desire.
1. Set up a trust
A trust is a legal, fiduciary arrangement in which you give a third party the ability to hold your assets for your beneficiaries and distribute them according to your wishes. Trusts can help distribute your assets faster by allowing a trusted individual, like your attorney or accountant, to manage them rather than probate courts. It also helps distribute assets in a more controlled fashion. For example, if you have children, you may want them to receive only some of your assets at a time. You may instruct the trustee to wait until they become adults, then distribute the funds in smaller amounts over time so they don't receive all your assets when unprepared to handle them.
2. Get a life insurance policy
Life insurance policy death benefits are income tax-free but may count toward your estate, meaning they may be subject to estate taxes. However, an irrevocable life insurance trust (ILIT) can hold your life insurance policy and manage its distribution when you pass away. The IRS does not count the death benefit as part of your estate if you pass away more than three years after placing the policy in the ILIT. Once you put a policy in an ILIT, you can't change it nor easily revoke it, so you must be certain you're ready to hand the policy over.
Some life insurance policies also offer a cash value component that can enhance your estate planning. With a cash value life insurance policy, part of each premium goes toward this component. It grows tax-deferred at a specific rate depending on policy type, and you can tap into the funds via loans or withdrawals. As a result, you could use the cash value to benefit your heirs while still alive.
Keep in mind that accessing your cash value may be more difficult if it's in an ILIT. You may consider holding the policy yourself for a while to take advantage of the cash value, then placing it in an ILIT later in life. Regardless of what option you choose, a life insurance calculator can help you select the right coverage amount so you can avoid overpaying or falling short of your needs.
3. Prepare your documents
Estate planning documents help you spell out all of your wishes in writing. This leaves nothing up to question, which can ensure your wishes are met and help avoid probate courts or family conflict. Here are some documents your estate plan may need:
Last will and testament: Your will lays out your wishes for asset distribution when you pass away. It also names an executor, the individual responsible for distributing those assets. You can also name guardians for children if needed.
Durable power of attorney: This names someone to make financial decisions for you, such as managing your bank accounts or filing tax returns, if you become incapacitated.
Healthcare power of attorney: This names someone to make medical decisions for you, such as treatment decisions, if you become incapacitated.
HIPAA authorization: HIPAA authorization grants named individuals the ability to access your medical records and discuss your health with providers.
Letter of intent: This provides non-legally binding instructions and information on various matters, such as explanations of your estate planning decisions or funeral wishes, to aid your executor and loved ones in carrying out your wishes more effectively.
4. Review your plan regularly
Life changes, such as marriage, divorce, new children or grandchildren, or moving to a new location, can change your goals and financial circumstances. Therefore, review your estate plan regularly to ensure it continues to meet your needs. If anything changes, consult with an estate planning attorney to adjust your plan.
The bottom line
A good estate plan helps you leave your loved ones with a more comfortable legacy, helping to set them up for financial security after your passing. By implementing the four key tips outlined above, individuals can ensure that their assets get distributed properly. If you're ready to plan your legacy, consider working with an estate planning attorney.
Content within this article is provided for general informational purposes and is not provided as tax, legal, health, or financial advice for any person or for any specific situation. Employers, employees, and other individuals should contact their own advisers about their situations. For complete details, including availability and costs of Aflac insurance, please contact your local Aflac agent.
Aflac coverage is underwritten by American Family Life Assurance Company of Columbus. In New York, Aflac coverage is underwritten by American Family Life Assurance Company of New York.
Aflac life plans - 68000 series: In Arkansas, Idaho, Oklahoma & Virginia, Policies: ICC1368100, ICC1368200, ICC1368300, ICC1368400. In Delaware, Policies A68100-A68400. 65000 series: In Virginia, Policies ICC0965JTO & ICC0965JWO. B61000 series: In Arkansas, Idaho, Oklahoma & Virginia, Policies: ICC18B61JWO & ICC18B61JTO. In Delaware, Policies B61JWO, B61JTO. B60000 series: In Arkansas, Idaho, Oklahoma & Virginia, Policies: ICC18B60C10, ICC18B60100, ICC18B60200, ICC18B60300, & ICC18B60400. Q60000 series/Whole: In Arkansas & Delaware, Policy Q60100M. In Idaho, Policy Q60100MID. In Oklahoma, Policy Q60100MOK. Not available in Virginia. Q60000 series/Term: In Delaware, Policies Q60200CM. In Arkansas, Idaho, Oklahoma, Policies ICC18Q60200C, ICC18Q60300C, ICC18Q60400C. Not available in Virginia.
Coverage may not be available in all states, including but not limited to DE, ID, NJ, NM, NY or VA. Benefits/premium rates may vary based on state and plan levels. Optional riders may be available at an additional cost. Policies and riders may also contain a waiting period. Refer to the exact policy and rider forms for benefit details, definitions, limitations and exclusions.
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Aflac New York | 22 Corporate Woods Boulevard, Suite 2 | Albany, NY 12211
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Senior PR & Corporate Communications contact: Angie Blackmar, 706-392-2097 or ABlackmar2@aflac.com
SOURCE: Aflac
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