No matter what your income level happens to be, or how much savings you may have accumulated, when it comes to financial planning, you should not put it off. Unfortunately, most of us are focused more on maintaining financial stability than actually planning ahead. Yet, living from one paycheck to the next is never really anyone’s goal. In order to assure long term financial stability, you need to plan ahead.
Purpose of estate planning
Estate planning is one way to prepare yourself and your family for death and even for the possibility of incapacity during your lifetime. There are a several different options when it comes to estate planning tools. Which ones are best for you will depend on your unique goals for the future. Your estate planning attorney can help.
Be prepared for possible incapacity
The legal definition of incapacity is the inability to comprehend the consequences of certain legal proceedings, including entering into contracts or signing legal documents. Incapacity could be caused by either a physical or mental condition and can be temporary or permanent. Now, when it comes to estate planning matters, incapacity refers to the ability of an individual to manage his or her own affairs and to make important legal decisions for themselves. Without an appropriate estate plan that addresses incapacity issues, you could end up being appointed a court-supervised conservator or guardian.
How to handle your estate after your death
The other purpose of estate planning is to create a plan for handling your estate after your death. One of the primary estate planning instruments used to establish what to do with your assets after your death is the Last Will and Testament, or will for short. A will is essential a set of written instructions on how your estate should be distributed after your death. A will can also provide a way for you to nominate a guardian for your minor children. A disadvantage of a will, however, is that your estate must go through the probate process before your assets can be distributed.
What is Financial Planning?
When you take the proper steps to prepare for your future, by creating a plan for the appropriate management of your finances while you are still living, you have begun your financial planning. Life goals can include certain things like buying your first home, saving for college, and planning for your ultimate retirement.
The first step is usually to collect information about your finances so you can analyze your current financial situation. Once you have set your life goals, you can formulate a financial strategy to meet those goals. Once your plan has been executed, it is wise to review that plan periodically, to ensure that your goals are still being met.
Financial planning is not only for wealthy people
Many people see financial planning as something only required by the wealthy. It may be true that the more money someone has, the more complicated your finances might be, but, even if you do not have a six figure salary, or hundreds of thousands of dollars in savings, you still need to consider planning for your financial future. One issue you may encounter, is that some financial advisors impose ever-increasing minimum asset requirements. This reality may leave some investors without any resource. The good news is, your estate planning attorney can assist you with your financial planning.
Choices other than independent financial advisers
Even though not all independent financial advisers enforce asset minimums, many still refuse to take on smaller accounts. Unfortunately, the free advice offered by banks, insurance companies and mutual funds are often just clever sales pitches for the financial and investment products they sell.
What type of advice does the average investor need?
Considering the reality that the middle class has been hit harder by job loss and other economic issues, the advice middle class families require is much different than what wealthier families may need. The middle class can benefit from much more than just figuring out how to save for retirement, they also need debt management and cash flow management advice, as well.
For instance, a young couple may be considering buying their first home, but they already have significant debt. A financial planning attorney can help the couple recognize the necessary trade-offs usually required in life, and help them focus on not only spending and saving but also investing.
Join us for a FREE workshop! If you have questions regarding financial planning, or any other estate planning matters, contact Gaughan & Connealy for a consultation either online or by calling us at (913) 262-2000.