Many believe estate planning is only important for those older or wealthy. Due to this, many put it off for years, if not forever. This is wrong.
You should know that estate planning is important for everyone, regardless of age and financial status. This is because it ensures financial security for yourself and the family or friends to whom you desire to transmit property and assets following your death.
If you’re thinking about estate planning, here are the crucial steps you should follow:
Get a financial planner and estate attorney.
There is a difference between an estate attorney and a financial planner. Financial planners assess your existing financial condition, define financial objectives, and devise ways to achieve those objectives.
They specialize in wealth management and advise on financial assets and tax advantages.
While they are important, financial planners cannot provide legal advice or offer legal remedies, such as helping you establish a trust. This is the work of an estate attorney.
When you have these estate planning experts on your side, they will help you simplify and decrease the expense of transferring assets to your heirs, preserve your assets, offer tax-saving methods, prepare planning paperwork to safeguard your wishes, and help with the funding and implementation processes required for the plan to work correctly.
They will literary do the heavy lifting to ensure your financial goals are reached.
Have an estate administrator.
In most cases, the spouse is the estate administrator. This is not good. This is because your partner may die before you, necessitating the choosing of another administrator.
There are no hard and fast rules on the person you should choose as an administrator. You can choose anyone you feel is right for the position.
When choosing, remember that the person will be in charge of your estate’s administration. They must be accountable and competent to make sound decisions and express your wishes while remaining neutral on your behalf.
Put together the relevant documents.
You need to have several documents in place for your estate planning to be complete. They include:
Last will and testament: This legal document specifies who will inherit your property after you die. The document expedites the probate court process and aids in carrying out your ultimate desires.
Your executor will carry out the provisions of your will. In your will, you can also name a guardian for your minor children and/or a trustee for beneficiaries with special needs.
Living will: A living will specifies the medical procedures you would or would not like to receive to help keep you alive. Would you want CPR, breathing, tube feeding, palliative care, etc., to keep you alive if you become incompetent and unable to make your own medical decisions? A living will documents your wishes.
A Trust: A trust allows a trustee to hold assets to benefit one or more beneficiaries. Trusts specify how and when assets are transferred to heirs.
Many people can’t tell the difference between will and trust, but they are different. Trusts help you skip the probate process, reducing costs, keeping your financial affairs private, and providing your beneficiaries quicker access to your assets than a will would.
Trusts also allow far greater control over how and when assets are passed on than wills.
Power of attorney: This legal document empowers someone you trust to handle legal and financial affairs on your behalf.
You should have a Power of Attorney in place if someone cannot manage their finances. If you do not have a Power of Attorney, the only other option is a highly expensive and impersonal guardianship case.
Update your beneficiaries
Remember that the beneficiaries on some assets, including pensions, life insurance, and 401K accounts, will bypass probate and take precedence over provisions in your will or trust. Due to this, it is critical to keep beneficiary designations up to date.
Thankfully, designating or altering beneficiaries is often a simple process. You will likely find an online form to fill out if you contact the appropriate organizations.
Take inventory of the physical and non-physical assets
You need to make a list of everything worth you own. This includes jewelry, gadgets, antiquities, and family heirlooms. If possible, go the extra mile and take pictures.
Make a note of everything you want to send to a specific individual so that it can be included in your will or trust.
Many people have bank accounts, retirement accounts, 401K plans, brokerage accounts, insurance policies, and other non-physical assets.
In many cases, the owners die with information about these assets. This is wrong. To ensure this doesn’t happen, gather all the information about such assets in one location.
Include account numbers on your statements so others can quickly find the information. When feasible, include contact information and passwords so that a loved one can contact the relevant person or organization in the event of your death.
You’ll want to keep track of not only your assets, but also your debts. Mortgages, credit cards, and auto loans are all crucial, and most of them must be settled by your estate.
Again, gather them in one location, physically, digitally, or both, and make it simple for your executor to find them. Include statements with account numbers, passwords, and contact information if available.
Don’t forget about your other digital accounts. You’ll need to keep a list of login names and passwords on hand so that someone can access those accounts and take care of them, including shutting them off.
Plan your funeral
Planning your funeral ahead of time helps your bereaved family and friends. Are you going to be buried or cremated?
If buried, where will you be buried? Do you prefer a public or private service, or none at all? You should specify this. You can even go to the extent of specifying which songs should be played at your funeral.
Planning your funeral makes an excellent farewell gift for those you care about. If possible, pay for funeral fees and a headstone before you die.