Northwestern Mutual

Estate Planning

Give the gift of an estate plan.

Estate Planning

Does the phrase 'estate planning' conjure up images of old money being transferred from one affluent generation to the next? You may be surprised to learn that you don't have to be old or wealthy or famous to benefit from an estate plan, because estate planning is not just about the money.

Estate planning is about making sure your wishes are known and honored if you become incapacitated or die1. When you have an estate plan in place, your children or other loved ones won't be burdened with making tough decisions on your behalf when they're already dealing with your illness or death.

What's involved in developing an estate plan? In some ways, your plan will evolve as you move through life. At the very least, however, your estate plan should include the following:

When you legally become an adult:

See an example of a financial plan

As soon as you are of legal age in your state, establish the foundational pieces of an estate plan:

  • Will or trust: Ensure that your assets are transferred to the right people at the right time, according to your wishes. While a will and a trust can help you accomplish this goal, they differ slightly on one point: privacy. A will becomes a matter of public record as it is executed during probate. Anyone can see what's in a will and who gets what. By contrast, the transfer of assets into a trust is handled privately. Download our white paper Is a Trust Right for You?
  • Health care directive or living will: Specify the extent to which you want health care professionals to treat you if you become ill or incapacitated.
  • Powers of attorney: Identify people you trust and give them the legal authority to act on your behalf in case of an accident or sudden illness. A power of attorney for health care can make health care decisions on your behalf if you're unable to do so and can access your medical records to the extent that it's allowed under the Health Insurance Portability and Accountability Act (HIPAA). And a durable power of attorney for finances allows that person to handle your personal financial affairs like signing checks and preparing tax returns.

If you get married:

  • Update your health care directive and powers of attorney to include your spouse.
  • Update beneficiary designations on your will or trust and on other assets, such as life insurance policies or retirement accounts.
your estate plan

If you have children:

Update your will or trust and beneficiary designations, as needed. Then:

  • Name a guardian. In the event that you're unable to raise your children, who would you want to care for them? Choose a legal guardian for children under the age of 18. And if you have a child or relative with special needs, be sure to address his or her care and income through a special-needs trust to avoid jeopardizing eligibility for government benefits.

As you accumulate wealth:

Update your will or trust regularly to reflect assets you may accumulate throughout life, such as the addition of a vacation home. Be sure to document your specific wishes for the transfer of your assets to family, friends, your alma mater or charitable organizations.

Depending on the size of your estate, planning can also help you:

  • Reduce the cost of administering your estate.
  • Reduce or eliminate gift or estate taxes.
  • Protect your estate from mismanagement.
  • Protect your estate from the claims of creditors and ex-spouses.

As you think about preparing or updating your estate plan, remember this: Each state has pre-determined rules about the distribution of assets. If no estate plan is in place, state laws take precedence—which means there's no guarantee your wishes will be honored.

So give the gift of an estate plan. It's just as important as the gift of money. Not only will your wishes be honored, you won't burden your loved ones with having to make important decisions on your behalf.

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