After a few years of earning money, you've done all the right things. Perhaps you've used the Fool's Credit Cards and Consumer Debt discussion board to get your loans under control and paid off. Maybe you've even started looking at information about investing, such as the lessons available at the Fool's School. You're on the right track, and you want to stay there.
As you begin to build your assets, it becomes even more important to consider various estate-planning issues. In addition to the points discussed in the previous article in this series, consider a couple of other questions:
1. In my planning, have I taken full advantage of my employee benefits?
2. How can I protect myself from the consequences of unforeseen events?
Employee benefits and beneficiary designations
If you work as an employee, you may have a number of employee benefits, including health insurance, a retirement plan, and employer-provided life insurance. Making sure you understand and use these benefits effectively is crucial to finding the best path to your future.
For a retirement plan, learning about employer matching and investment options is critical. Equally important, however, is making sure that those benefits work not just for you but also for the people you care about if something happens to you. In the early part of your career, your retirement plan will likely be relatively small, but employer-provided life insurance may pay out several years' worth of pay as a lump sum at your death. In many cases, this payout can represent the vast majority of a person's estate -- in other words, you may be worth more dead than alive!
Simply by carefully completing forms that your employer will provide, you can designate your recipients for these funds. Filling out these forms can not only avoid confusion and delay but also keep your loved ones from paying unnecessary taxes and penalties.
Protection from unforeseen events
As your financial picture gets more complicated, making sure you can weather unexpected hardship is important. If, for instance, you were seriously injured or disabled, would you be able to pay your bills? If you have a mortgage or other debt, what will happen if you die before your debt is fully repaid? You don't want your parents or siblings to suffer a financial tragedy as well as a personal one.
Many employers provide disability insurance to employees, but only by reviewing your policy closely will you be able to determine whether it will protect you fully. If you need more protection, private insurance is often an option to reduce your risk. A good financial planner or insurance agent can coordinate your insurance needs into your overall financial plan.
By understanding and refining your own planning, you build a strong foundation. If you then choose to have a family, you will be able to expand on your own planning to meet the needs of your loved ones as well.
Are you at a different place in your life from what you're read here? No problem -- our series addresses estate-planning needs for a variety of life stages. Just go back to the beginning and let the links take you where you want to go.
Robert Brokamp of our Rule Your Retirement service had an estate plan before graduating from junior high school. If you need help planning your retirement, take Rule Your Retirement for afree trial run today.
Fool contributor Dan Caplinger welcomes your comments.
