Many are not clear about the differences between financial planning and estate planning. Both are important but serve separate and distinct purposes. To manage your money now and to protect your wealth in the future, understanding how financial planning and estate planning work together is vital.
Financial planning is the process of examining your long-term needs and goals and managing your money in a way that meets both. During this process, a financial planner can help you identify your goals, analyze your current financial situation, and implement a plan to help you reach your goal.
Financial ups and downs are a regular part of life. Because of this, your financial plan requires regular maintenance and tweaking to respond to changes in the economy.
Reasons to Hire a Financial Planner
You may not have the time, desire, or expertise necessary to create an adequate plan for your financial future. For this reason, using the services of a financial planning professional offers many advantages.
Hiring a financial planner can allow you to:
- Understand how much money you need for a comfortable retirement and how to plan for it
- Handle a large inheritance
- Understand the implications of marriage or divorce
- Plan for the birth of children and grandchildren
- Deal with a financial crisis like an illness, job loss, or market downturn
- Plan for and pay for education
- Care for children with disabilities or aging parents
- Buy, sell, or pass on a business
Utilizing the services of a financial planner makes sense when you consider all that goes into creating an effective and robust plan. However, the sooner you create and follow your financial plan, the sooner you can be on the road to the secure future you dream about.
While financial planning is the process of deciding how best to grow your wealth, estate planning focuses on managing and protecting your wealth after it’s been accumulated. Estate planning also involves how to distribute your property at the appropriate time.
Your estate consists of everything you own and includes things like:
- Your house
- Your bank accounts, investment accounts, and retirement accounts
- Your life insurance policy
- Personal property like jewelry, cars, and furniture
- Any other real estate you may own
Estate planning refers to the process of figuring out what to do with all of your assets at the time of your death or if you are no longer mentally able to manage your wealth. Your estate plan also specifies who will handle that process. Estate plans include a last will and testament, certain powers of attorney, healthcare directives, and living wills.
Depending on the needs of your dependents, your estate plan may include the creation of trusts to manage and protect the money to be used in the care of minor children or someone with disabilities.
Why hire an estate planning attorney?
The reasons for hiring a skilled estate planner are numerous. The consequences of not having an estate plan in place or having a poorly written plan can be catastrophic to your financial legacy.
You should hire an estate planning attorney because they can:
- Help prevent a lengthy and expensive probate process
- Use the best means to protect your assets and your family
- Help you avoid common mistakes, saving you time and money
- Find ways to reduce tax liabilities
- Provide objectivity in the estate planning process
- Review and make any necessary changes to your estate plan
If you die without an estate plan in place, your assets will be subject to disbursement under your state’s probate laws. This will likely mean your property will not be distributed as you might have wished.
The law firm of Merlino & Gonzalez helps Staten Island, NY, residents create and manage an estate plan that meets their desires and the needs of their families. Get in touch with our office today.