Estate Planning Fundamentals Guide

Estate planning might sound like something only the wealthy need to worry about, but the truth is, it’s essential for everyone. Whether you’re looking to protect your assets, ensure your loved ones are taken care of, or simply gain peace of mind, a well-thought-out estate plan is a crucial step.

What is an Estate Plan?

Think of an estate plan as a map for how you want your personal and financial affairs handled in case of incapacity or death. Without one, decisions about your estate will be made according to state laws, potentially causing financial and emotional stress for your family.

Who Needs an Estate Plan?

The short answer? You do. If you want control over what happens to your property and assets after you pass, an estate plan is the way to ensure your wishes are met. It’s especially crucial if:

• Your spouse isn’t comfortable handling financial matters.
• You have minor children.
• Your net worth exceeds the federal transfer tax exclusion amount ($12,920,000 in 2023) or your state’s exemption amount.
• You own property in multiple states.
• You have concerns about financial privacy.
• You own a business.

Planning for Incapacity

No one likes to think about becoming incapacitated, but it can happen to anyone at any time. Without proper planning, a court may appoint a guardian to make decisions for you, potentially leading to outcomes you wouldn’t have wanted. Setting up financial and health care powers of attorney ensures that a trusted person will manage your affairs if you’re unable to do so.

What Happens If You Die Without an Estate Plan?

If you pass away without an estate plan, some assets may transfer automatically to joint owners or designated beneficiaries. However, most property will be distributed according to state intestacy laws. These laws often divide assets between spouses and children, which may not align with your wishes. Additionally, unmarried partners are generally not recognized under intestacy laws, making estate planning even more critical for non-married individuals.

The Importance of a Will

A will is a fundamental component of any estate plan. It allows you to:

• Direct how your property will be distributed.
• Name an executor to carry out your wishes.
• Appoint a guardian for your minor children.
• Establish a trust for asset management.

Keep in mind that wills often go through probate, a legal process that can be time-consuming and costly. Consulting an estate planning attorney can help ensure your will is valid and structured effectively.

The Role of Life Insurance

Life insurance can serve multiple purposes in an estate plan, such as:

• Providing financial support for your loved ones.
• Covering final expenses and outstanding debts.
• Ensuring liquidity so assets don’t have to be sold to cover costs.
• Funding charitable bequests or a child’s education.

It’s important to structure life insurance policies correctly to minimize estate taxes and maximize benefits for your heirs.

Trusts: A Versatile Estate Planning Tool

Trusts offer a range of benefits, including asset protection, tax minimization, and probate avoidance. There are various types of trusts, such as:

• Living Trusts – Created during your lifetime and can be either revocable or irrevocable.
• Testamentary Trusts – Established through your will and take effect upon your death.
• Revocable Trusts – Allow you to maintain control and make changes during your lifetime.
• Irrevocable Trusts – Cannot be altered but offer greater tax and asset protection benefits.

Trusts can help ensure that your assets are managed according to your wishes, even after your passing.

Next Steps: Assess Your Estate Plan

Take a moment to consider:

• Do you have a plan for incapacity?
• Do you have a will?
• Would your estate be subject to transfer taxes?
• Does your existing estate plan reflect your current wishes and circumstances?

If you answered “no” to any of these questions, now is the time to act. Estate planning isn’t just for the wealthy—it’s a way to protect your loved ones and ensure your legacy is handled according to your desires. Taking small steps today can make a significant difference in securing your financial future and providing peace of mind for you and your family.

Get in touch with our Investments & Insurance Team to learn more about estate management, investment strategies, college savings, retirement planning, or any other financial goals you’re looking to achieve.

Non-deposit investment products and services are offered through CUSO Financial Services, L.P. (“CUSO Financial”), a registered broker-dealer (Member FINRA/SIPC) and SEC Registered Investment Advisor. Products offered through CUSO Financial: are not NCUA/NCUSIF or otherwise federally insured, are not guarantees or obligations of the credit union, and may involve investment risk including possible loss of principal. Investment Representatives are registered through CUSO Financial. Columbia Credit Union has contracted with CUSO Financial to make non-deposit investment products and services available to credit union members. Atria Wealth Solutions, Inc. (“Atria”) is a modern wealth management solutions company and is not a Registered Investment Advisor or broker-dealer. Investment products, services and advice are only provided through CUSO Financial, a subsidiary of Atria.