Estate planning is often one of the most overlooked parts of a financial plan. When you’re focused on planning for your future, it can be easy to put off decisions about what will happen to your things, money, and the people you care about most when you’re gone. However, having a plan in place can help provide clarity for your loved ones and confidence for you that your wishes are carried out. It’s best to create this plan sooner rather than later.
An estate plan is a collection of legal documents and decisions designed to help manage your affairs and how your assets are distributed after your death. While every person's situation is different, there are important considerations that can help guide the process.
1. Make sure your essential documents are in place.
A will is often the foundation of that plan. It specifies who should receive assets that are in your name and can also designate a guardian for minor children. Additionally, it can help you and your heirs pay substantially less in taxes, fees, and court costs. If you have young children, this can be one of the most important documents you make. While an important foundational piece to your estate plan, there are other documents you can and should consider.
Consider designating a financial durable power of attorney and a health care proxy. A financial durable power of attorney allows someone you trust to handle financial matters if you become unable to manage them yourself. And a health care proxy allows someone to make medical decisions on your behalf.
Review these documents periodically, especially after major life events such as marriage, divorce, the birth of a child, or the loss of a loved one. Keeping them current helps ensure they accurately reflect your wishes.
2. Understand how your assets will be transferred
Many people are surprised to learn that a will does not control every asset they own.
Certain assets, such as retirement accounts, life insurance policies, and other financial accounts, may pass directly to the beneficiaries named on those accounts. In many cases, these beneficiary designations take precedence over instructions contained in a will.
That is why it is important to regularly review your beneficiary designations and make sure they align with your overall estate plan.
If you have young children or heirs who may not be prepared to manage a large inheritance, you may also want to explore whether a trust could be beneficial. A trust can provide greater control over how and when assets are distributed and may help ensure funds are managed according to your wishes.
The right strategy depends on your goals, family dynamics, and financial situation, so it is often helpful to work with an estate planning attorney. Explore your options as an HPE employee.
3. Plan for more than what happens after death
Beyond distributing assets, estate planning is also about preparing for situations in which you may become incapacitated and unable to make decisions for yourself. Every family is unique, and it is up to you and your loved ones to determine the best options for your family.
With proper planning, you can help reduce uncertainty and stress for family members and loved ones during challenging times. It can also help ensure that financial and health care decisions are handled by individuals you trust. Privacy and efficiency are important considerations as you determine who to work with when getting your affairs in order. In some situations, certain estate planning tools, such as trusts, may help reduce delays, costs, and public exposure associated with the probate process.
Getting started
The most important step in estate planning is simply getting started. Your plan can be flexible and you don’t need to have every decision finalized before meeting with an estate planning attorney or financial professional. It may change as your life changes.
But by putting essential documents in place, understanding how your assets will be transferred, and preparing for both incapacity and death, you can help protect the people you care about and create greater peace of mind for yourself and your loved ones.
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