Safeguarding your financial future is important. No one likes to think about the impact of their death on their loved ones. But the reality is, not having certain elements in place can turn a tragic situation into a financial crisis. Having these safeguards in place can help provide your family with the financial security they need should the unexpected happen.
Here are three things that you can do to help bring you and your family peace of mind in the event of a tragedy and begin safeguarding your financial future:
You likely want your loved ones to be financially stable after you pass away, and life insurance can help make that possible. The amount of life insurance coverage you need depends on your income, outstanding debts, and expenses that you would like to pay for (such as a college education for your children) upon your death.
Life insurance is purchased as either a term or permanent life insurance policy and can have additional benefits, such as riders and cash value accounts that you can utilize while you’re still alive. Talk to a financial advisor about life insurance options and how much you’ll need to help protect your family.
A will guides how you want your intentions carried out after your death. It includes the following information:
If you do not have a will at the time of your death, your heirs will receive distributions according to your state’s intestacy laws. Depending on your marital status, this means your living relatives, such as your spouse, children, siblings, parents, and aunts/uncles, will each receive a portion of your estate. If you pass away with no known heirs, the state in which you reside will absorb your assets— something you may want to avoid.
It’s important to note that when you die, your Will must go through probate, an at-times lengthy process of proving your will in court. Take this into consideration when planning your estate.
You can create a will using an online tool from a reputable legal services website or through an attorney. Revisit your will regularly as your life changes to ensure it is up to date with current information.
A trust is an arrangement by you and a third party, or trustee, to hold assets on behalf of your beneficiaries for an amount of time that you determine. Most trusts have the benefit of avoiding probate and minimizing estate taxes, allowing you greater control over your wealth and legacy. Consulting an attorney is recommended regarding whether a trust is appropriate for your estate plan. Unlike a will, there are several types of trusts to consider based on your situation.
These safeguards may take some time, effort, money, and assistance from professionals to put in place. However, it is well worth it as these safeguards will help your family avoid financial stress. In addition to the untimely event of losing you.
Disclosure: While tax and legal issues may be discussed in the general course of financial and investment planning the Registered Investment Advisor does not provide tax or legal advice. Please consult with your tax or a legal professional prior to making decisions relative to these issues.
First Fruits Asset Management has been in the financial services profession since 2007. We work together to create a personalized financial plan. We then review and revise the plan as situations and/or goals change over time. Contact us today to learn more about how we can build a partnership with you today.