May 11, 2022
Are you married or engaged, own property, or have children? If so, you should consider creating an estate plan if you don’t have one already. Though nobody likes to think about death, having a plan in place for the unexpected can give you peace of mind for the future.
Or consider, as Hills Bank Trust Officer Erin Grabe puts it: “Whether you know it or not, you already have an estate plan. Because if you don’t have anything in place, the law of the state you reside in decides what to do with your property upon your passing. It’s important to have an estate plan to make those decisions for yourself.”
An estate plan is essentially a set of instructions that determine what happens to an individual’s property when they die. It’s also a way to nominate someone to settle your affairs. You can decide to have an individual take care of passing on your assets, or a corporate executor like Hills Bank.
Here are some common questions about estate planning, and how you can take action to ensure your wishes are honored.
When should I make an estate plan?
“The sooner you make an estate plan, the better,” Grabe says. “I would especially recommend creating an estate plan as a new parent, a new property owner, or when any other big life event happens like marriage, divorce, or changes in health.”
Once you create a plan, you can always go back and change it. In fact, Grabe recommends reviewing your plan periodically to ensure it is up-to-date with your assets and wishes.
What should you know about the estate planning process?
Grabe says those making an estate plan should understand that there are a number of tools available to them for handling a variety of scenarios.
“Let’s say you have young kids who aren’t yet old enough (or don’t have the financial maturity) to manage their own affairs. A lot of times, people in those situations set up a trust,” she says. “A trust involves a third party known as a trustee who manages assets for the beneficiary – in that case, the kids.”
A trust can be set up to handle the specific needs of the beneficiary, and can be managed by an individual such as a family member or a corporate trustee. If the funds are being dispersed to the beneficiary over a period of time, the trust can use investment accounts to help the funds within keep pace with inflation and managed according to a variety of factors – like how old the beneficiaries will be when they begin taking distributions from the trust, what their needs are and will be in the future, how long the funds will last, etc. “At a minimum, we include investments to make sure the funds that are left in trust for those beneficiaries continue to serve them and keep up with the cost of inflation over time,” Grabe says. “That helps the funds go further than if they’re just sitting in a checking account.”
Why would someone choose a corporate executor over a family member?
“People choose to use an institution like Hills Bank as an executor in a situation where they don’t want to put the pressure of managing an estate on a family member, because it can be quite a bit of work.” Grabe says. “Otherwise, the assets themselves may be too complex for an individual to handle or they simply may not have anyone suitable to nominate.”
If any of those factors are applicable to you, Grabe recommends getting a start on your estate plan by reaching out to a wealth management professional who can help simplify the process and ease your concerns. “It can be scary for people to think about putting together an estate plan because it means contemplating your own demise, which, granted, isn’t a pleasant thing to do,” Grabe says. “But it can really give you peace of mind to have your affairs in order and make sure everything happens the way you want it to when that time comes.”
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