Let’s face it: Estate planning is, for most people, challenging at best. It involves grappling with mortality, trying to remember arcane terms and concepts, and — perhaps most challenging — addressing sensitive family issues. It’s a small wonder that so few people have an up-to-date estate plan.
One of the reasons the process is so challenging is that most people view estate planning in isolation. That is, they think of it as involving things that happen only after they’ve died. Viewed more comprehensively, however, estate planning is really just one component of a properly structured financial plan.
And good planning goes beyond finances. To create a plan that may truly improve your life, you must first discover those key goals and issues that really motivate you, and then compare your existing financial situation to these goals to see how prepared you are to meet them. Once you’ve uncovered what is most important to you, you can begin to formulate a plan that really makes sense.
Why have an estate plan? The reasons begin with providing for a spouse or children or other family members and aligning your wealth transfer with your charitable vision. But there are other things to consider, such as helping protect assets from lawsuits or creditors, avoiding probate, or avoiding a substantial settlement impact on your heirs. See the chart below for other pitfalls to consider.