Estate planning is a valuable tool that offers people of all ages and incomes an effective means to determine who will receive their assets and who will make critical decisions in the event of death or incapacitating illness.

While often thought of as a concern for the wealthy and, typically, older adults, financial planning experts say that’s not necessarily so.

When done earlier in life, it can help younger people, as well as those who are older, decide who will benefit from both their tangible and intangible assets.  Planners advise that estate plans, like other financial documents, can and should be fine-tuned, as one’s age and life circumstances change. They should also be reassessed on an ongoing basis.

Regardless of when you choose to begin preparing for the disposition of your estate, there are a number of steps you can take to get started.

The first is to take an inventory of your assets, including tangible items, such as your home, other real estate, collections that might include coins, guns, antiques and trading cards. Of course, there are the intangible possessions, such as checking and saving accounts, stocks and mutual funds, life insurance policies, 401K and IRA accounts and any interest in a business.

It is also recommended that, as you begin your estate planning, you account for all your family members that you wish to include. Consider whether you have enough life insurance to care for your children, aging parents and anyone with special needs, should that be a concern. Experts strongly urge that guardians be named in your plan, as well.

A living will, also known as an advanced healthcare directive, should be a part of your estate plan, as well as naming a power of attorney for medical matters and a financial power of attorney.  Some experts advise naming a back-up person for each of these important roles.

Be certain to review your beneficiaries – and update them as needed. Contingent beneficiaries should also be added.

When it comes to taxes, planners encourage reviewing your state’s laws. While the most recent federal law allows for up to $5.49 million to be exempt from taxes, laws can vary from state to state, according to retirement planners.

As you move forward with this vital part of your financial planning, consider the value of hiring a professional to guide you. Experts recommend consulting with an estate attorney and/or a tax advisor to help determine what you need to do.

Whether you prepare a plan on your own, or with the assistance of a professional, planners agree, be certain that you really understand your plan. While advisors can handle the nuances, the client needs to fully grasp the fundamentals.

Contact your tax advisor at Diamond & Associates, PC with any questions you have about estate planning.