Too many people get caught up in the idea that an estate plan is only for the obscenely wealthy, those who have multiple homes and millions of assets that they need to protect. The reality is, anyone with assets can benefit from developing an estate plan.
Whether you have a 401(k), a home, or even just a simple savings account, you should be thinking about how your assets will be distributed should an unexpected tragedy occur.
How to get started
A recent article by CNBC points out that in the next 30 to 40 years, over $30 trillion in assets will pass from baby boomers to their heirs. In order to make sure that these assets don't get tied up in legal proceedings that can take years to resolve and lead to bitterness and resentment, several things are recommended.
Set up a trust
This is a good way for starters to get into estate planning. A trust can be structured in a variety of ways, and according to a variety of benchmarks-be they the age of the recipient or how the money should be spent.
Trusts offer several benefits:
- They're exempt from creditors.
- It's separate from the marital pool, so it won't be in play in the event of a divorce
- They can be set up to your specifications. For example, you can even create an IRA trust.
Whatever steps are taken, it should be noted that it's imperative to stay on top of your estate plan. Keep your will up-to-date, make sure your beneficiaries are chosen carefully, and don't let major life events go unaddressed if they relate to your estate plan.