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Have you ever given some thought to what will happen to your possessions and assets after your passing? It may not feel pleasant or comfortable to think about, but it’s important to ask yourself this question at some point in your life. If you want to make sure that your loved ones are taken care of after your passing and that your final wishes are carried out, you’ll need to have an estate plan in place.
Understanding Estate Planning
When a person dies or becomes incapacitated, estate planning determines how their assets will be preserved, managed, and distributed. To put it another way, it’s a process that involves evaluating your assets, making a will or trust, choosing beneficiaries, and generally putting your affairs in order.
The following are other purposes of an estate plan:
- Securing resources for future generations
- Making sure your intentions are followed regarding the distribution of all of your assets, including those that pass-through beneficiary designation, such as retirement accounts and life insurance policies
- Ensuring that people you trust can make decisions for you in the event that you aren’t able to do so
- Keeping costs and taxes to a minimum
- Contributing to your preferred charitable organization or supporting a cause
Preparing an estate plan sounds difficult and overwhelming, but you can always work with a legal expert. Check online sources like an asset protection website to find a lawyer that specializes in estate planning.
Steps To Estate Planning
Planning your estate doesn’t have to be a stressful task. To start making your estate plan, follow the steps below:
1. Make A List Of What You Have
To begin, go around your home and write a list of anything of value you find. There are several examples of items that fall under this category, including your property, appliances, power tools, jewelry, vehicles, and so on. Don’t forget to list your non-tangible assets, like insurance policies, IRAs, bank accounts, 401Ks, and brokerage accounts.
The list is likely to be much longer than you imagined, so be prepared for that. In addition, keep a running list of people or organizations who will receive an asset or a belonging after your passing.
2. Designate Beneficiaries
Go over all of your assets and decide how they should be shared among your loved ones.
Think about your dependents’ immediate and long-term financial needs before making any decisions about their future. For example, you may wish to provide for the education of your children and grandkids, or you may want to outline what happens to your assets if your spouse remarries after your passing.
Life insurance policy proceeds, retirement account funds, and other financial account assets must be given to intended beneficiaries. Otherwise, they will be included in your estate and could be passed on to an unintended beneficiary.
3. Document Your Plans
It’s not enough to let those you care about know what you want. You need a document that’s bonded legally and lays everything out in as much detail as possible. That’s best handled through a will or trust.
A final will and testament is a legal document that explains how you want your possessions and affairs handled after your death. This involves appointing an executor, someone to handle your will. The executor will distribute and handle your assets, name a guardian for your dependents, and oversee the probate procedure for your will.
The executor is also in charge of preparing and submitting the deceased’s final personal income tax returns. When all of the taxes and debts have been paid, the executor will apply for court permission to divide the remainder of the estate between the heirs and beneficiaries.
4. Update Your Insurance
Life insurance and annuities, like retirement funds, go straight to the beneficiaries. Life insurance companies should be contacted to verify that your beneficiaries have been updated and are listed accurately.
5. Draft A Will
Wills are important for people of any age above the age of 18. It’s the guide for distributing your possessions and can prevent conflict among your family members. A will can appoint a guardian for your children and pet caretaker.
Your will can include charitable gifts. Sign, date, and notarize this document in front of two non-related witnesses.
6. Consult An Estate Planning Lawyer
In order to ensure that your estate plan complies with local laws, you should seek the advice of a knowledgeable estate planning attorney. Your goals will be evaluated by an experienced attorney, who will then explain how to make the most effective use possible of legal documents. Your lawyer can also point out important details that you might have overlooked and assist you in drafting the relevant documents, such as:
- Last Will and Testament
- Declaration of Guardianship
- Letters of Instruction
- Living Will
- Trust Agreements
- Disposition of Remains
- Umbrella Insurance
- Advanced Healthcare Directive
- Charitable Gifts
- Durable Powers of Attorney
7. Revisit Your Estate Plan
The course of one’s life takes several turns. The same should go for your estate plan.
If your life circumstances improve or crumble, you should reevaluate your estate planning. Getting married or divorcing, having a child, losing a loved one, starting a new job, or being fired are all examples of life transitions.
Even if nothing changes in your life, you should revisit your estate plan on a regular basis since laws might change eventually.
Preparation Is Key
It’s impossible to foresee the future. A person who dies without a will or other type of estate plan is known as ‘intestate.’ Without a will, the state has a set of asset distribution models that it uses to distribute your assets. You’ll have no say in who obtains your property or things under state guidelines. Moreover, you won’t be able to decide how your possessions are distributed after your death. It’s the state that will be the one to handle these legal matters for you.
Some people think that estate planning is for the rich. However, it isn’t. Even if you don’t own a fancy home or valuable art, you need to decide who will inherit your assets after you’re gone. With an estate plan in place, the future of your loved ones will be safe and secure.