It’s not something that anyone wants to dwell on, but none of us will be around forever. Whatever your age, the state of your health or your job, it’s perfectly understandable to be anxious about what will happen to your family after you’re no longer around to take care of them. Despite this near universal anxiety, however, all too few of us are fully conversant of the measures that we need to put in place to ensure your family’s financial well-being after we’re gone. There’s a tendency (especially if we’re young and healthy) to put this off for another time but (let’s be honest), there’s never a good time to discuss matters of this nature. Even if you’re in your thirties or even your twenties, it’s worth at least knowing the infrastructure that needs to be put in place in case of early death and what happens if it’s not there…
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Early death – It’s not something that anyone wants to dwell on, but none of us will be around forever. Even if you’re young, it’s worth at least knowing the infrastructure that needs to be put in place and what happens if it’s not there…
If, heaven forbid, something should happen to you such as an accident or a sudden illness: if you don’t have adequate provision for what happens to your assets after you’re gone, this is known as dying “intestate”. In this case, the distribution of your assets will be determined by state law rather than any specific wishes that you may have. An executor will be assigned by default. This is usually the surviving spouse or an appropriately aged child. The laws vary slightly from state to state but suffice it to say that the distribution of assets will likely not be in accordance with your wishes. This is why even young and healthy people should have the following measures in place…
Many people (especially young people), struggle to set money aside for an appropriate form of insurance to cover essentials like costs for funeral arrangements if the worst should happen. This is understandable, especially since living costs such as accommodation are taking up an increasingly large proportion of our income. However, a good life insurance policy will ease the settling of your financial affairs and give your family peace of mind in your absence. Unfortunately most people don’t buy life insurance off their own steam, they wait for someone to sell it to them. This is rarely the best way to get a policy that will meet their individual needs.
A will is absolutely essential if you have a specific idea of how you want your assets to be distributed in your absence. There’s absolutely no better way of ensuring that your wishes are met after you’re gone on your own terms rather than those of local government. Nonetheless a shocking 64% of Americans die without making a will. It’s the only way to ensure that you get to nominate the executor of your estate.
Tax free gifts
Even with a comprehensive life insurance policy in place there’s a distinct possibility that your family’s inheritance will be heavily taxed after both federal and state taxes are accounting for. Again, some states are more demanding than others in this regard, so unless you have an urge to move to Florida, tax free gifting may be a useful and perfectly legal way of sharing your assets with your family (and you get to enjoy seeing them spend it).
This is a contributed post.
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