As we usher in a new year, many of us set resolutions to improve our financial health, whether it’s saving more, investing wisely, or paying off debts. While these goals are essential for securing our financial future, one aspect often overlooked in the pursuit of financial stability is estate planning. Integrating estate planning into your New Year’s financial resolutions can provide you and your loved ones with peace of mind and long-term security. Estate planning involves much more than just drafting a will. It encompasses a range of legal strategies to manage your assets during your lifetime and ensure they are distributed according to your wishes after your death. By incorporating estate planning into your financial resolutions, you can take proactive steps to protect your wealth, minimize taxes, and provide for your family’s future needs.

Here are some ways to integrate estate planning into your New Year’s financial resolutions:

  • If you already have an estate plan in place, the new year is an excellent time to review it and make any necessary updates to your estate plan. Life changes such as marriage, divorce, the birth of a child, or the acquisition of new assets can all necessitate revisions to your estate plan.  Perhaps you have a will. A will allows you to specify how you want your assets distributed after your death and appoints guardians for minor children. Therefore, if you don’t have a will, make it a priority to create one in the new year. If you already have a will, review it to ensure it is updated and accurately reflects your current intentions. Alternatively, a trust might make more sense. Think of your current financial situation and goals––to preserve them, establishing a trust may be beneficial. Trusts can help you avoid probate, maintain privacy, and provide for the ongoing management of assets for the benefit of your heirs. Consider working with an estate planning attorney to determine if a trust aligns with your objectives and to set one up if needed.
  • Review the beneficiary designations on your retirement accounts, life insurance policies, and other financial accounts. Ensure that these designations are up to date and in line with your current wishes. Keep in mind that beneficiary designations typically supersede instructions in a will, so it’s essential to coordinate them properly.
  • Estate planning isn’t just about what happens after you pass away; it also involves planning for potential incapacity during your lifetime. Consider creating advance directives such as a durable power of attorney and a healthcare proxy to designate individuals to make financial and medical decisions on your behalf if you become unable to do so yourself.
  • Estate taxes can significantly erode the wealth you’ve worked hard to accumulate. Incorporating tax-minimization strategies into your estate plan can help preserve more of your assets for your beneficiaries. Techniques such as gifting, charitable giving, and establishing trusts can be effective in reducing estate tax liability. Also, don’t forget that if you live in D.C., the estate tax is much lower than the federal tax rate. I’ve found that this is a surprise for many people living in the District.
  • Make sure your estate planning wishes are communicated effectively with those around you. Discussing your intentions openly can help prevent misunderstandings and conflicts down the road. Make sure your family members are aware of where your important documents are kept and whom to contact in the event of your incapacity or death.

Integrating estate planning into your New Year’s financial resolutions is a proactive step toward securing your financial future and providing for your loved ones. By taking the time to review your estate plan, update necessary documents, and implement appropriate strategies, you can ensure that your assets are managed and distributed according to your wishes. Consult with an experienced estate planning attorney to help you navigate the complexities of estate planning and create a comprehensive plan tailored to your individual needs and goals. With proper planning, you can enjoy greater peace of mind knowing that your loved ones will be taken care of no matter what the future holds.