Are you looking to plan your estate, but aren’t quite sure where to begin?
Planning an estate can be taxing, time-consuming, and confusing. Luckily, there are some tips that can help you along the way. What do you need to know?
Check out this guide to discover the top estate planning basics that you need to know.
1. Hire a Lawyer
Estate planning is anything but a straightforward process. No matter how big your estate is, we suggest hiring a lawyer to help you figure things out.
Estate planning lawyers do more than just draw up the right documents. They help you understand the ins and outs of things like:
- The benefits of drawing up a financial or medical power of attorney
- The different types of trusts
- How to deal with your debts (You can also check out this guide to find out what happens with debt when you die)
- Updating your will and estate
Estate plans are complex and they need to be outlined properly. By hiring an attorney, you’re ensuring that your assets are passed on according to your specifications. This will provide a tremendous peace of mind.
2. Take an Inventory of Your Belongings
Of course, before you hire an attorney to help you with your estate, you need to know what your estate actually consists of. You should create a master list of both your tangible and intangible assets.
Tangible assets include things like:
- Land, homes, or other real estate properties
- Vehicles, including cars, boats, and motorcycles
- Collectible items
- Any other personal possessions
Intangible assets include things like:
- Saving and checking accounts and certificates of deposit
- Life insurance policies
- Ownership in a business
- Health savings accounts
- Stocks, bonds, and mutuals
- Retirement plans, such as 401(k)s and IRAs
Once you have an inventory of all of these belongings, you need to estimate the value of everything. Of course, you don’t need exact amounts, just estimates. Outside sources can help with some of these estimates, such as home appraisals or financial statements.
3. Account for the Needs of Your Family
Once you have a sense of what your assets are, you need to think about how you’re going to protect them and your family once you pass.
If you’re married and you want your partner and children to be able to maintain their current lifestyle, then you may want to think about purchasing life insurance. Whether you’re married or single, you should also name a backup guardian if you still have children under 18, just in case.
This will allow the new guardian to side-step family court, which can be a huge drain on your assets.
4. Decide On Your Directives
Choosing your directives isn’t just about deciding who will inherit your assets.
You also need to consider things like a medical care directive, a financial power of attorney, a limited power of attorney, and a funeral prepayment plan. A medical care directive explains what your medical wishes are should you be unable to decide for yourself.
With a financial power of attorney, you give someone else the ability to manage your finances should you become medically incapable of doing so yourself. A limited power of attorney is worth considering if you’re nervous about turning everything over to someone else. With this document, limits will be imposed in terms of what a person can and cannot do on your behalf. And finally setting up a funeral prepayment plan will allow you to organize your final wishes and ensure they don’t become a burden financially on the loved ones you leave behind. A medical care directive explains what your medical wishes are should you be unable to decide for yourself.
With a financial power of attorney, you give someone else the ability to manage your finances should you become medically incapable of doing so yourself. A limited power of attorney is worth considering if you’re nervous about turning everything over to someone else. With this document, limits will be imposed in terms of what a person can and cannot do on your behalf.
Estate Planning Basics: Are You Ready to Start Planning?
Now that you know these estate planning basics, it’s time to start your journey. While planning your estate can take a lot of work, you’ll be glad you did it once you’re done.
Be sure to check back in with our blog for more estate planning tips and tricks.