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Death and Taxes - Why Estate Planning is Important

As Ben Franklin wrote, "But in this world nothing can be said to be certain, except death and taxes." While we are in the midst of tax season, I would like to talk about death today.  It is not a pleasant topic and I know many who would just like to avoid the discussion. However, as a financial planner, I must often bring this topic up.  Where do you stand with estate planning? Do you have documents prepared? Have you looked at the documents recently? What would happen if you did not have any estate planning documents and you passed? Or if both spouses passed together? Or you were in the hospital in a coma?

To me, estate planning is equivalent to bringing an umbrella. It is going to rain sometime, and we all are going to pass. Why not be prepared for when it happens. It will not help you, but it will help your loved ones handle your affairs more efficiently. Nothing is worse than a sudden death and the remaining loved one not having an idea of where anything is or what to do. By doing your estate planning you can give one final gift of planning.

Items you should have include a will to name a guardian for young children and to tell your executor how to distribute your assets.  Powers of attorney for both financial matters and for healthcare decisions are important for when you are alive but unable to make your own decisions.  A living will may be a separate document or included in your power of attorney to let loved ones know what you want done in a terminal situation. You may also want a revocable trust or an irrevocable trust to help avoid probate court or to give away assets for tax purposes. Meet with an estate planning attorney to develop the best estate plan for you. We can provide referrals to attorneys if requested.

So much of life is online now.  How will your loved ones find these online assets and documents? Compose instructions for assigned people to access your digital assets, such as your email, social media accounts, and physical devices (phones, laptops, cryptocurrency hard wallets). Do not forget to list usernames, passwords, security question answers, and any other information needed to get into each digital asset. Be sure to store this inventory in a secure location, somewhere other than a desk drawer or email account. Back up any digital assets in the cloud to a local computer or storage device on a frequent basis so that designated family members and fiduciaries can easily access them. Bottom line - have a plan!

Family First Financial Planning has a Financial Emergency Kit you can complete to give to your loved ones, so they have knowledge of important items.  Feel free to call, text, or email us to get one to complete to give to your family or designated executor or power holder. - Leslie Trowbridge,CFP®