As we stated in our previous blog post, financial planning and estate planning go hand-in-hand. Estate planning can help you manage your financial and personal affairs. It allows you to evaluate your assets and consider what is going to happen to those assets when you die.

As your financial advisors, the MFP team can help identify risks, prioritize next steps, and prepare for any costs related to the estate-planning process. 

We can even recommend qualified estate-planning lawyers, if needed. Estate planning, and financial planning in general, involves several key players. While the MFP team specializes in wealth management, we also play an important role in guiding the coordination between attorneys, tax professionals, and other key participants through the planning process.

To help get you started on the right track, here are three strategies for estate planning.

Named Beneficiaries

If you die without a will or estate plan, your state government will settle your estate and divide your assets among your closest relatives, including your spouse, children, parents, etc. This court process is called probate. 

Probate can take months to finalize depending on the size of your estate and number of living relatives. Minimizing or avoiding probate is a primary motivation for estate planning for many people. Not only is dealing with probate stressful for your loved ones, but it can delay their inheritance. 

With a structured estate plan, you can ensure your loved ones avoid a stressful court process and receive their inheritance in a timely fashion. Plus, you can ensure your assets are distributed how you like, as opposed to how the state’s intestacy laws see fit.

Joint Ownership

Joint ownership of property and assets can be another estate planning strategy to avoid probate. For example, if you’d like your home to transfer to your adult child upon your death, you can choose to add them as a joint owner with right of survivorship. 

It is important to be aware that this strategy technically means you and your child will have equal rights and ownership of the property while you are still living. You should always discuss your joint ownership estate plans with your financial advisor to avoid tax risks and claims.

Financial Power of Attorney

A financial power of attorney is a legal document that authorizes another person to make financial decisions on your behalf. This includes paying your bills and making arrangements for your care.

Establishing a financial POA while you are young and healthy is an important estate planning strategy. This will help avoid your loved ones from having to petition the court for conservatorship once you become incapacitated. 

Many financial POAs take effect the day they are signed. If you’d prefer not to grant power immediately, a springing POA might be better suited for your needs. Springing POAs grant rights based on mental or physical decline. 

Reach out to us today at [email protected] or 301.990.9170 to learn more about estate planning strategies.

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