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As tax season winds down and the dust settles on another year of financial assessments and paperwork, it may be tempting to close the chapter and move on to the next item on your list. However, while you’re still in tax mode, consider adding one more task to your financial to-do list: estate planning.

While estate planning may not evoke the same sense of urgency as filing taxes, it’s a crucial component of your financial well-being. Estate planning is the process of arranging for the management and disposal of your assets in the event of incapacitation or death. It generally involves the creation of legal documents, like wills, trusts, and powers of attorney, to ensure that your wishes are carried out and your loved ones are provided for according to your desires.

Getting your plans squared away while you’re still in tax mode can provide peace of mind that lasts long after the tax season ends.

Understanding Estate Planning

Estate planning is not just about distributing your wealth – it’s also about protecting your assets, your loved ones, and your legacy. By creating a comprehensive estate plan, you gain control over how your assets are managed and distributed. Plus, planning now can help you minimize taxes and expenses, avoid family disputes, and ensure your wishes are honored.

Your estate plan will typically include several key components:

• Last Will: A Last Will is a legal document that outlines how your assets should be distributed upon your death. If you have dependent children, you can assign a guardian to care for them in your absence. 

• Living Will: While a Last Will handles the distribution of your assets upon your death, a Living Will describes your wishes toward future medical care if you cannot make them yourself. For example, if you’re in a severe accident, your Living Will can provide instructions for the types of medical care you prefer.

• Trusts: A Living Trust is a legal arrangement that allows a third party, or a trustee, to hold and manage assets on behalf of your beneficiaries.

• Power of Attorney: A Power of Attorney (POA) is a legal document that allows you to designate someone who can make decisions on your behalf should you become incapacitated. There are two common POAs: Financial & Healthcare.

• • A Financial Power of Attorney allows the person you designate to access your financial accounts to help pay your bills and manage your money.

• • A Healthcare Power of Attorney allows the individual you designate to speak with medical professionals on your behalf and help make decisions for you.

Without proper Powers of Attorney in place, most financial institutions and medical facilities will not allow someone to act on your behalf. That’s why it’s crucial to set up POAs even if you’re completely healthy.

Why Tax Season is the Ideal Time for Estate Planning

1. Two Birds, One Stone: During tax season, you’re already reviewing your various financial accounts and documents, including mortgage statements, investment portfolios, and retirement accounts. This presents a perfect opportunity to conduct a simultaneous financial review and take stock of your assets and liabilities, which lay the groundwork for your estate plan.   

2. Important Changes: Major life events, such as marriage, the birth or adoption of a child, or the purchase of a home, often trigger changes to your tax situation. These same events may also necessitate changes to your existing estate plan, particularly regarding beneficiary designations and asset distribution.   

3. Using Your Tax Refund: If you’re fortunate enough to receive a tax refund, consider allocating a portion of it toward your estate plan. Investing in estate planning now can yield significant long-term benefits, providing peace of mind and security for you and your loved ones.   

4. Financial Responsibility: Just like filing your taxes is a fundamental aspect of financial responsibility, so is estate planning. By prioritizing estate planning alongside tax preparation, you demonstrate a commitment to safeguarding your financial future and protecting your family’s interests.

We’re Here to Help!

As tax season draws to a close, don’t overlook the importance of estate planning in securing your financial legacy. By addressing estate planning matters while your financial details are at the forefront of your mind, you can ensure that your wishes are fulfilled, and your loved ones are provided for according to your intentions.

We understand the importance of comprehensive financial planning and are here to support you every step of the way. Our team of experts provides guidance tailored to your unique needs. If you want to learn more about our financial advisor services and how we can help with estate planning, please stop by any of our convenient branch locations or call 800.528.3330, ext. 7550, to speak with a team member today.

Each individual’s financial situation is unique and readers are encouraged to contact Floridacentral Credit Union when seeking financial advice on the products and services discussed. This article is for educational purposes only; the authors assume no legal responsibility for the completeness or accuracy of the contents.