Estate planning is the preparation of tasks to manage your assets in the event of your incapacitation or death. This involves making a plan in advance, naming the individuals or organizations you want to receive your assets and organizing their management and transfer. Today, we’re covering the basics of getting started with your own plans for the future.
Take stock of your assets, both tangible and intangible.
- Tangible: Think things you can physically take possession of, like homes, vehicles, collectibles, land and other personal possessions.
- Intangible: These might include bank accounts, insurance policies, ownership of a business, retirement plans, stocks, bonds and mutual funds.
Once you inventory all these items, you need to estimate their value. Outside valuations (like recent appraisals and financial statements) will be helpful here. When you don’t have outside valuations, value your items based on how you’d expect your heirs to value them. This way, you can help ensure your possessions are distributed equally.
Account for your family’s future needs.
Consider how to protect your estate’s assets and your family when you’re no longer around. This may include naming a guardian for your children, documenting your wishes for their care and ensuring you have adequate life insurance.
Establish your directives.
You’ll want to have a few essential documents on-hand—namely:
- Durable power of attorney. This is a document that lets you appoint a trusted person, such as a family member, as your agent to make financial decisions on your behalf in the event that you are you are incapacitated or unable to do so for yourself.
- Will. It provides written instructions for how you want to distribute any assets held in your name and lets you appoint a guardian for minor children. Your will also names an executor responsible for carrying out those instructions. If you do not have a will, state law determines how your assets are distributed.
- Living will vs. health care proxy. A living will allows you to specify the type of future medical care and treatment you receive should you become incapacitated. A health care proxy grants another person the power to make those health decisions for you.
- Revocable trust. This one’s (relatively) optional and can be created with the assistance of a living trust attorney. A revocable trust is a written document of instructions for how you want your assets handled after you die. You, as the grantor or creator of the trust, can amend or terminate it at any time.
Review your beneficiaries.
Make sure the right people are benefiting from your estate planning. Check your retirement and insurance accounts’ beneficiary designations; they can outweigh what’s listed in awhile. Don’t leave any beneficiary sections blanks and name contingent, or backup, beneficiaries just in case.
Be up-to-date on your state’s estate tax laws.
Some states have estate taxes and some have inheritance taxes. This is where an estate attorney is going to come in handy. It’s our job to keep abreast of the applicable laws and regulations, so you can rest assured all your i’s are dotted and t’s are crossed. This is especially true if you’re working with a large or complex estate with special child care concerns, business issues or nonfamilial heirs. It’s also the case if you have any doubts about the process at all. A qualified trust lawyer will ensure you’re on the proper estate planning path, especially if you live in a state with its own estate or inheritance taxes. Estate planning is often a way to minimize estate and inheritance taxes.
Plan to reassess regularly.
Life is always changing—your estate plan should be flexible, too! Revisit your legacy planning when your circumstances change: in cases of marriage, divorce, childbirth, loss of a loved one, or even getting or losing a job. It’s worth reassessing even if your circumstances haven’t changed to be sure it’s in line with federal and state estate planning law.
Every individual’s estate planning needs are different, and the processes and laws for estate planning vary by state, which is why it is important to consult with your estate attorney for advice regarding your specific situation. It can be an intimidating and complex endeavor, but it’s beyond worthwhile. Thankfully, you don’t have to do it alone. Estate planning attorneys—like the expert trust attorneys at Volunteer Law Firm—are a great asset in ensuring you’ve got a plan in place you can feel good about.