Protect what matters most
Estate planning isn’t something that most people think about or get around to doing because they think it’s hard or expensive or just unpleasant. Some people don’t even know where to start.
But estate planning doesn’t have to be complicated.
In fact, estate planning is two things:
1) The decision of who gets your property after your passing and choosing how that property will be transferred at your death, and
2) The decision of who will provide care for your young children if you cannot, as well as who will make the important medical and financial decisions when you are unable to do so yourself.
Here are 7 basic areas of estate planning:
1 – Evaluate Your Personal Situation
Before you start, it is important to first take a realistic look at your current situation. Are you married? Do you have kids? Stepchildren or grandchildren? Are there any charities you would like your property to go to upon your passing?
2 – Choose a Beneficiary
After you have evaluated your personal situation, you are now able to choose your beneficiaries. These are the people and/or organizations to which you leave your property upon your passing. Make sure your choices are clear so that there are no questions or issues that arise when your property is distributed.
3 – Provide for Young Children
If you have children, it is important to make sure they are provided for and protected in case of an unfortunate event. You will need to decide who will raise your children and who will manage any money and/or property that is legally left to them.
4 – Plan for Incapacity
Don’t forget the importance of making arrangements for the handling of your medical and financial affairs if you ever become incapacitated. This is done by putting a Healthcare Directive and Power of Attorney in place. Not making clear decisions here can result in unnecessary family conflict.
5 – Transfer Your Property After You Pass
In order to transfer your property to your beneficiaries, legal devices must be put in place such as wills, living trusts and other transfer devices.
Wills – This document leaves some or all of your property to your beneficiaries. It can also name a guardian (adult) for your young children
Living Trusts – This legal document is similar to a will and is more common as it does not require probate or other court proceedings for the transfer of property to your beneficiaries.
6 – Estate Taxes
Depending on how much your estate is worth, estate taxes may be owed. Keep this in mind, especially when high net-worth property is being transferred, to ensure your estate is protected.
7 – Make Changes
It’s important to know that you are not “locked-in” to your estate plan and that changes can be made in your will and living trust at any time for any reason. Be sure to review your estate planning and update information on a regular basis to ensure your wishes are carried out after your passing.
Make sure your family knows who to contact if something happens to you and that your spouse/children knows where all your important financial accounts are located. Not doing these two things can cause extra grief and hardship in a time of loss.
For more information about estate planning, contact a licensed and certified estate planning attorney.