While many find it anxiety-provoking to think about, creating a legally binding plan to distribute your assets after your death ultimately provides you with peace of mind.
While we encourage you to sit down with a legal professional, we also want to provide some general guidelines you can think through independently. Estate planning is a complex field, but a general outline can clear up some of the mystery.
1. What do you want to accomplish? Will you be providing for children under 18? Or are your beneficiaries young adults, older adults, relatives, or charities? Exactly how might you provide for your children?
Options you may consider include a trust and/or a will.
What is a trust? Trusts provide control over the distribution of assets, privacy, and potential tax advantages. A trust is a fiduciary arrangement that allows a trustee to hold assets on behalf of a beneficiary or beneficiaries. Trusts can be arranged in many ways, specifying exactly how and when the assets pass to the heirs.
You may also consider a will. A will is a legal document that takes effect upon your death. It outlines your wishes, including provisions for guardianship of your minor children.
Again, consulting with an estate planning attorney can help you decide if a trust, a will, or both are best for securing your assets for your heirs.
Don’t wait until it’s too late to secure the future of your loved ones. Take action today.
2. Have you taken stock of your possessions? It’s important to create an inventory of your assets, such as bank accounts, insurance policies, investment accounts, and personal belongings.
3. Don’t avoid the difficult conversation. If you were to pass away suddenly, do your loved ones have access to important documents, financial statements, etc.? It is important to inform your loved ones about the location of your will and the legal professionals who will handle the process.
In other words, it’s important to ensure that your heirs won’t be forced to embark on an unexpected scavenger hunt in the event of your unexpected passing.
4. Choose the right executor or trustee. Select a trustworthy individual or institution to act on your behalf. You need someone dependable, trustworthy, organized, fair, and financially savvy. Identifying the best candidate can be made easier if you focus on these important attributes.
5. Be sure to designate and regularly update your beneficiaries. It’s common to list a beneficiary or beneficiaries for an IRA and life insurance policy.
However, it’s crucial to ensure that your designated beneficiaries align with your will. For instance, if the will you drafted last year names Bob as the recipient of your IRA at ABC Brokerage, but the beneficiary listed 15 years ago is Sally, Sally will be the recipient of the assets.
6. Prepare for medical decisions. Estate planning isn’t complete unless you prepare legal documents such as a durable power of attorney for financial matters and a medical power of attorney for medical decisions. It is crucial in the event you are incapacitated.
These documents appoint trusted individuals to make decisions on your behalf when you can’t.
7. Update your estate plan regularly. Life is full of unexpected turns. Milestone events such as marriage, divorce, births, and deaths can significantly impact your wishes and create gaps in your plan.
In addition, charities that used to hold significance may not have the same impact anymore. Therefore, it is crucial to review and make necessary adjustments to your plan periodically.
Estate planning is a personalized process, and we want to emphasize that the above-mentioned steps are merely an outline.
Our objective is to initiate a dialogue and assist you in developing a plan or motivate you to revise an existing one.
We are always available to address any questions you may have.
Original Source: Horsesmouth