THERE'S MORE TO YOUR ESTATE
Why Estate Planning is Important to You
Estate planning is one of the cornerstones of a sound financial plan. Essentially, the purpose of an estate plan is to preserve your wealth both during your lifetime and after.
What you do today can make a world of difference to your happiness and the future of the people you care about most. The benefits of an estate plan can be calculated not only in dollars but also peace of mind.
There’s more to your Estate than you might think
It is commonly thought that only the very wealthy have an “estate” worth attention. Not true. Your estate may not be of a size that makes headline news, but it is probably more impressive than you realize. You will see what we mean once you’ve had an opportunity to take stock of the assets that make up your estate.
The way to find out the value of your estate is to prepare a net-worth statement. This is simply a personal balance sheet which lists what you own (assets) and what you owe (liabilities). Assets minus liabilities give you your net worth. Your estate planning needs become clear once you know where you stand.
How to complete your Personal Balance Sheet
Where do you stand?
Whether you have a positive net worth (assets exceed liabilities), or a negative net worth (liabilities exceed assets), this information is key to your estate planning. Owning more than you owe, a positive net worth, is obviously good news. But for estate planning purposes you need to examine your assets very carefully.
Perhaps, one of the most valuable assets you have is your home.
Maybe you are just starting on your working career and have had little opportunity to build an estate. This is particularly likely to be the case if you have young children to support. Over the years, you’ll probably have a growing, positive net worth. But right now, your net worth statement might show you owe more than you own.
A negative net worth signals an immediate estate planning need. Otherwise premature death could mean tremendous financial hardship for any dependents you have. Even as a person with no direct financial responsibility for others. It is important to ensure there is enough money so no on else is burdened with paying expenses and debts on your behalf.
There are many low-cost solutions to handle these kinds of estate needs. We will explore these options in Part 2 of the Estate Planning Series.