It’s been a while since I posted a blog. I thought I’d go back to basics.
Estate planning is an all-encompassing term that refers to the process of organizing, cataloging and making arrangements for the proper handling of your affairs after you die, including your dependents as wells as your assets, valuables and heirlooms. It usually involves writing a will, setting up a power of attorney and detailing funeral arrangements. It should also include creating a Health Care Proxy or Living Will. Here are some of the key steps in getting started with estate planning.
1. Catalog your things: Your estate is more than just your home. It includes all of the things you own including your car and other valuable possessions, and "intangible assets" such as investments and savings. If you own a business, that's also part of your estate.
2. Assess your family's needs: Make sure that your family is cared for in the case of your death or incapacitation. If you're a financial provider for your family, the loss of your income could put them at risk.
3. Review and/or buy life insurance: A life insurance policy can help provide a financial cushion that can be used to cover living expenses, college tuition costs and mortgage payments. If you're single or don't have dependents, then you might not need it.
4. Name a guardian: If you have children under the age of 18, you'll want to work out who will care for them if you pass away. If you don't, the court will.
5. Name an executor: Appoint someone to manage the process of dividing up your belongings.
6. List beneficiaries: In short, who gets what? They can be family members like children, grandchildren and siblings; organizations such as nonprofits and museums; and friends or non-relatives.
7. Appoint a power of attorney: This is someone to act on your behalf in the event you can't make decisions on your own. It literally means putting your life in someone else's hands, so it's recommended you appoint someone you trust who is not a beneficiary.
8. Hire a professional: An attorney who specializes in estate law can save you a lot of time, energy and effort in building out your estate plan.
9. Document your plans: You'll want a legal document laying everything out in as much detail as possible. That's best done in a trust or will. A last will and testament outlines how you want your assets and affairs handled after you die. This includes appointing an executor, someone to manage how your will is executed. The executor handles distribution of your assets and sees your will through the probate process.
A trust details your last wishes without the need for probate court, and a revocable living trust can be changed or adjusted. A trust is generally less expensive since it avoids the need for probate while accommodating all of your assets and preferences. When you die, your trust goes into the hands of your trustees, or the legal owner of assets in your trust.
A living will details your healthcare preferences in case you're unable to communicate or make those decisions on your own. (This is also called a medical care or health care directive.) If you're in a position where you require life support or life-saving medications, a living will lists your preferences rather than relying on relatives or friends to make decisions on your behalf.
In summary, don’t wait. Life is uncertain. Don’t burden loved ones with difficult decisions and extra work while they’re grieving your loss. Make a plan.