Although no one wants to think about becoming incapacitated, suffering a sudden illness, or even passing away, it is crucial to have an estate plan in place to provide some protection for your family and your assets.
Having essential estate planning documents in order to aid your family during these challenging times is crucial. There are five basic steps that you can take to navigate the estate planning process to ensure you include all of the things to do in will planning. It is vital that you understand what an estate is so you are better able to prepare.
What is an Estate?
Estate is a term used to describe your possessions. This can include a person's property, both real and personal. The property is owned by you as an individual prior to being distributed through a will or a trust.
One of the most common questions that people have is: "is estate planning tax deductible?" Unfortunately, the fees that are associated with estate planning are no longer tax deductible. However, a properly planned estate will save your family time and money in the long run.
Below are some tips on how to make an estate plan.
Take an Inventory of Your Estate
Many people are led to believe that they do not have enough assets to create an estate plan. It is essential to understand that your estate includes everything that you own. For this reason, the first step in basic estate planning should be to determine all of your assets. You will want to create an inventory of all of your belongings, both tangible and intangible.
Once you inventory all of your assets, you will need to estimate their value. This can be done through a recent home appraisal and by verifying statements of your bank accounts.
Asset Protection
After you determine what is in your estate and inventory all of your belongings, you will want to consider your family's needs. This involves considering the protection you want for your assets and your family after you pass away. Consider your family's needs and verify that you have adequate life insurance coverage to cover them.
If applicable, you will need to select a guardian for your children. Document your wishes regarding their care growing up. It is important to have this critical information written in your estate plan and your will.
Establish Your Directive
Your estate plan may include several legal directives. These documents are designed to specify the actions that should be taken if you lose the ability to make decisions for yourself. These directives can include your:
- Last Will & Testament
- Trust
- Financial Power of Attorney
- Healthcare Power of Attorney
- Advanced Directive/Living Will
Not having directives in place can lead to serious problems should you become incapacitated or pass away.
Review Your Listed Beneficiaries
You must make sure that the correct inheritance goes to the right person. It is always beneficial for you to review your selected beneficiaries to make sure the designations are correct. The designations that are identified can often outweigh the information stated in your will. As a result, people may not receive the right inheritance or anything at all.
You will also want to make sure all of your insurance and retirement accounts have listed the correct beneficiaries. It is also good to list an additional person as a contingent beneficiary. This ensures the inheritance and money still go to a listed party should something happen to your primary beneficiary.
Ensuring your beneficiaries are accurate can help to avoid any partition actions and conflicts in the future.
Plan to Reassess Your Estate Periodically
Estate plans can, and often do, change over time. If you created your estate plan several years ago, you might want to reassess it today. There is a good chance that some of the information will be inaccurate. It is best to revisit your estate plan periodically to ensure all of the information, people listed, and assets are correct and accounted for.
Estate planning can be a challenging process for people to navigate on their own. Therefore, it is recommended that you reach out to a trusts attorney. Our lawyers at Krogh & Decker, LLP can help you understand the options that are available to you and guide you through the process.