19 Jan 5 Steps to Easy Estate Planning
Generally, no one wants to contemplate his or her own mortality, however, when it comes to planning your estate, it’s important. You may feel that, when thinking of death, questions about who gets which of your assets are trivial. It is possible that this contributes to the fact that less than 45% of Americans have a will.
This is a very important question to face. When you’re gone, your loved ones will have to address these questions. This is something that can cause tension in a family. When you make the decision to execute a will and sign a few other basic documents you can save your loved ones loads of aggravation and unnecessary expense — and provide them the necessary time to focus on their loss.
To make it easier on you, we have broken it down into steps.
- Have an understanding of why you need a will in the first place.
First and foremost, educate yourself on why a will is necessary. A will allows you to explain to the world how you want to share your assets and why. Passing away without one is known as dying “intestate”, meaning the state decides who gets what without regard to your wishes or your heirs’ needs. The laws about this process vary by state. However, if you die and leave a spouse and kids behind, generally your assets will be split between your spouse and children. If you’re single with no children, then the state is likely to decide who among your blood relatives will inherit your estate. This can cause a lot of turmoil in your family.
Furthermore, creating your will is especially important for people with young children due to the fact that wills are the best way to nominate guardianship of minors.
- Take inventory and pick your team.
Once you have a good understanding of the importance of a will, the next step is to create a comprehensive list of your assets. This includes investments, retirement savings, insurance policies, real estate or business interests, and collectible and sentimental items.
Next, spend some time thinking about the following questions:
- Whom do you want responsible for executing your will?
- Whom do you want to inherit your assets?
- Whom do you want handling your financial affairs if you’re ever incapacitated?
- Whom do you want making medical decisions for you if you become unable to make them yourself?
- Whom do you want to name as guardians for your children in the event that you and their other parent dies?
- Draft your will.
Drafting your will is a very personal task, however, it is important to include a legal expert in order to ensure that everything is covered. This will also take less time because it will ensure that it is done the first time. You’ll want to hire an attorney to draw up a will and other documents for you. Costs for this can vary depending on the simplicity of your wishes and finances and if you wish to have a trust. In the end, having an experts help is worth it.
- Name an executor.
Drafting a will also allows you to choose your executor. This is the person who will be in charge of distributing your property, filing tax returns on behalf of your estate, and processing claims from creditors. Your executor can be a friend or relative, or it can be a professional like an accountant or lawyer. Most importantly, it should be someone you trust and who is willing and able to take on the responsibility.
- Assign power of attorney.
No one is immune from the loss of mental clarity that can come with aging or from a health crisis. This is obviously out of our control so granting someone you trust the power of attorney, known as your “agent” or “attorney in fact”, allows that you to pay bills, manage investments, or make key financial decisions if you are unable to do so. Your agent is has the power to sign your name and is obligated to be your fiduciary. This means they must act in your best financial interest at all times and in accordance with your wishes.
There are various kinds of powers of attorney. The “durable” power of attorney goes into effect immediately. However, most people building an estate plan opt for what’s often called a “springing” power of attorney. This only goes into effect under circumstances that you specify. The most common circumstance of this is when an individual becomes incapacitated.
Drafting a will is something that can be painless and it is also extremely important. Let this list be your guide to a stress free estate planning.