If you’ve got a bit of savings accumulated, you’ve probably worked pretty hard to get it. However, do you have a plan set up for what happens to those savings, as well as the rest of your assets, if you’re not there to tell people who should get what? While setting up a plan now might feel a bit morbid, it can be a solid financial strategy to ensure your wealth gets into the right hands. The top three reasons that clients engage in estate planning are to avoid probate (59%), minimize discord among beneficiaries (57%), and protect children from mismanaging their inheritances (39%). Here are a few tips for planning your wealth management in the future to help things go more smoothly.
Don’t Ignore Debts
While you might want to give all of your savings directly to your family members, it’s important to not ignore any debts you might have. Nearly 80% of Americans are struggling with debt, including credit card debt, student loans, medical payments and more. Figure out a plan to address your debts first, before you start worrying about who will get what. That way, your family members won’t have to deal with that stress later on. Once you’ve settled your debts, you’ll be able to prioritize dividing up the rest of your assets accordingly. If you’re not careful in remembering this step, the rest of your estate planning could be interrupted by people collecting on old debts.
Remember Value In Belongings
Your assets don’t just include your savings account or other financial holdings; they also can include personal belongings. Cars, boats, furniture, technology, and more can all be included in your estate planning. Just remember that while these items hold inherent value, they might be worth more or less depending on the person who receives them. For example, while over 87 million U.S. adults participate in recreational boating, your brother who lives away from the coast isn’t going to get the same value out of your boat that you might assign to it.
Likewise, make sure you’re picking beneficiaries who are going to know what to do with the items you give them. Many people will melt down certain types of metals to sell them; iron ore typically melts at 2,750 degrees Fahrenheit, while steel typically has a melting point of 2,500 degrees Fahrenheit. Know what your relatives plan to do with any items they receive before you assign them as a beneficiary, or your items might end up where you don’t expect them or want them.
Consider Alternative Beneficiaries
Not everyone has the sort of relationship with family that would warrant assigning them as beneficiaries, and that’s a personal choice to make. However, that doesn’t mean you should leave where your assets go up to the attorneys. If you’re struggling with assigning a beneficiary, remember that there are some situations where you can assign charities to be beneficiaries. Some even choose to leave their belongings and assets to pets – while this might not always be the wisest financial decision, it’s a guarantee that your pet will be well taken care of.
Financial planning can be a challenge, particularly when it comes to inheritance and estate planning. However, thinking about it earlier on can help ensure you’re making the wisest decision for you and your family financially. These tips can help you figure out a plan that’s right for you and the ones you care about, so you can have confidence that your assets are going to the right people.