4 Ways Financial Planning and Estate Planning Work Together

4 Ways Financial Planning and Estate Planning Work Together - Marshall Financial Group

At Marshall Financial Group, we focus a lot on what your financial goals are and how to work towards achieving them. But there is another reality to planning for the future: what happens after you are no longer here. While many older adults are told to make estate plans, many young people don’t. What’s more, many people don’t understand how financial planning and estate planning work together. Here are a few things to consider with estate planning.

Just like financial planning, estate planning is for everyone.

We think everyone should have a financial plan, a way to achieve their financial goals. Similarly, estate planning is also important. Everyone needs an estate plan, which essentially determines what happens to your assets and debts when you die. If you own real property, investment or retirement assets, or have children, this is especially important. A comprehensive estate plan will determine the most effective ownership and beneficiary designations to fulfill your wishes.  Even if you have a will, you should designate a beneficiary for many assets.

If you don’t make a will, you won’t get to decide what happens to your money.

An estimated 50-60% of Americans don’t have a will in place. And without a will, state law will determine what happens to your assets when you die. In Maryland, the state outlines who receives your assets under the Intestacy laws. It is recommended “to leave a Will because you may not wish to leave your property in the way or in the amounts the general Intestacy statutes provide.”

A Durable Power of Attorney might become useful.

We’re often reminded of the usefulness of advance medical directives and powers of attorney when it comes to health issues. We know that if we are incapacitated, we’ll rely on someone else to make those medical decisions for us. At any age, a Durable Power of Attorney can be useful for the same reason. This legal document allows someone to handle legal and financial decisions for you if you cannot. A Durable Power of Attorney is generally considered a critical estate document.

Your heirs will be impacted.

Whether or not you have a will, the people who inherit your assets will be financially impacted. If you inherit an IRA, the 2019 SECURE Act generally requires that beneficiaries who are not a spouse, liquidate the account within ten years. Although talking about money within families can be difficult, it is often important to communicate with your family regarding your estate plans and how they might be impacted.

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