Human nature seems to steer away from discussing unhappy thoughts. We tend to focus more on happy memories or ideas, but we can’t avoid all negative thoughts or ideas. It’s important to plan for worst-case scenarios and ensuring that your family will be taken care of.  Some ways to plan for these scenarios include life insurance plans, trusts, and wills.

Life insurance is initially bought to fill gaps in your wealth. If it’s important to you to leave behind enough wealth for your loved ones to live the life you wish for them in the event of your death, you get this coverage. When that gap doesn’t exist anymore, you might decide that you no longer need life insurance. But before making that choice and as part of your financial plan, you should explore what life insurance can do as another asset class that allows your money and wealth to grow tax-free. It’s good to consider other alternatives or ways to leave an inheritance to your heirs that helps them avoid paying estate taxes or in creating a legacy for your family, such as a college or charity.

A trust fund for your grandchildren and great-grandchildren is another option that can also help to make sure they all have the opportunity to obtain a secondary education. Life insurance can be used for any of those purposes, and the process is not complex. I’ve even shown clients how life insurance can be used to create a secure, future, tax-free stream of income that I have referred to sometimes as a “proxy pension plan.” This can be a great way to create more investable cash, tax-free.

A will is also essential for providing for your loved ones. A properly written will can accomplish a few basic wishes for you. First, you will determine who will be in charge of seeing that your wishes, as expressed in your will, are carried out. That’s your executor. Second, you’re going to determine how you wish your estate to be distributed. If you have minor children, you’re going to determine who you would like to act as guardians if you pass away before they’ve reached majority age.

A will is the primary estate instrument, but there are other documents you should have in order as well, depending on your circumstances. You might create what is called an irrevocable life insurance trust (ILIT). Placing life insurance in a trust will save estate taxes. In any case, you should have a medical care directive or a living will. This will direct your medical care when you are unable to make those decisions.

There are a number of other types of trusts, too; one type to consider is called a spousal lifetime access trust (SLAT). This allows you to put the federal exemption amount for you and your spouse into a trust. This allows that money to grow free of estate tax, out of your estate and to future generations.

For more information about making planning for worst-case scenarios, visit tswealth.com.