You may think that only the super wealthy need to worry about estate planning. That’s not the case. If you have financial responsibilities—such as a house or children—you should take steps to help protect your estate and plan for the future for those who depend on you for support and security.
As you think about how you would like your finances handled, here are three key considerations:
1. Life Insurance
The cornerstone of any estate plan is Life Insurance. In the event of your death, it can help provide your family with the money needed to pay estate taxes, the mortgage and every day bills.
You may also consider Life Insurance for your spouse. Even if he or she doesn’t work outside the home, consider how much it would cost to hire someone to handle his or her household responsibilities that you don’t have to pay for now. Some experts estimate that paying professionals for services like childcare, transportation, cleaning, laundry, food-shopping and meal-preparation could cost as much as $40,000 a year.
The AIChE Insurance Program offers three Group Term Life Insurance plans with coverage amounts available up to $2,000,000. Each plan offers an Accelerated Death Benefit (also known as a ‘Living Benefit’) feature which is an important provision where you are eligible to receive up to 50% of the proceeds of your Life Insurance should you become terminally ill, offering you access to funds when you may need them most.*
A Will is a legal document that sets forth how you would like your estate to be handled. It states your wishes regarding the distribution of your money and possessions. A Will may also be used to appoint a guardian for your children and name an executor after your death. By having a Will drawn up by an attorney—this official document will help assure your wishes are carried out properly.
Keep in mind, a basic Will does not make provisions for your care if illness or injury causes you to become incapacitated or incompetent. That’s why it’s also important to create a Living Will. This document conveys your wishes regarding your personal health if you should no longer be able to make decisions yourself.
Leaving difficult decisions for your family to handle can cause unnecessary stress during an already a difficult time. Proper planning can help assure your wishes are carried out and at the same time help to prevent undue heartache for your loved ones.
A Trust is a legal relationship between three parties often found in Wills. Property is transferred by one party to be held ‘in trust’ by a second party for the benefit of a third party.
The terms of the Trust specify what property is to be transferred and who the beneficiaries will be of that Trust, making it a useful instrument for the transfer of your estate as it gives you more control over how your property will be distributed.
For example, rather than your beneficiaries receiving everything in a lump sum, a Trust can be used to provide your family with an income over a long period of time. You can establish a Trust which can be accessed during your lifetime. The assets of the Trust can be used to supplement your spouse’s income, fund your children’s education, help care for an elderly relative, and more.
Don’t wait. Put your financial affairs in order today with an estate plan. Most importantly, don’t forget to review and update your plan as your needs and lifestyle change.
*Term Life Insurance Plans are Underwritten by New York Life Insurance Company (New York, NY 10010) on policy form GMR. The Accelerated Death Benefit feature is not applicable to residents of Massachusetts. Please visit the Plan Details tab of the Life Insurance screens for more details on this feature.
This article is provided for general informational purposes only and is not intended to provide individualized business or legal advice. The information contained in this article was compiled from sources that Affinity considers to be reliable; however, Affinity does not warrant the accuracy or completeness of any information herein. You should discuss your individual circumstances thoroughly with your legal and other advisors before taking any action with regard to the subject matter of this article.