Many people feel that estate planning is for the wealthy or just to avoid paying taxes. However, organizing your estate to provide maximum benefits to your dependents and to minimize tax is simply prudent planning. Estate planning allows your assets (i.e. home, business, and stocks and bonds) to be distributed according to your wishes. For most people, estate planning begins with the birth of their first child because parents feel the need to provide for their growing family. Life insurance is often the first step in estate planning because it creates a means to provide funds for the surviving family members.
This is particularly important later in life as assets accumulate.
Five important steps for estate planning are:
- Setting the objectives of your estate plan.
- Collecting and analyzing data.
- Selecting strategies for distributing your estate before and after your death.
- Implementing the before-death strategies.
- Monitoring the plan and updating it as required.