Estate planning is one of the most important things that you could do as an adult who wants to safeguard your future as well as that of your loved ones. Most people who fail to do it may be scared by the potential complexity of the process.
With a little guidance, however, you can find that it’s not something that you can’t do easily, or fast for that matter. That said, take a look at these expert tips to help you prepare your estate so that this is something you can mark as done in your to-do list.
Start With an Inventory
The first step that you take should be creating an inventory of your assets. This can help you have a clearer idea of how much you have, and it’s very important as far as making the process of estate planning more justifiable.
It’s important to do this if you happen to be among the one out of every three Americans who have no living trust or will as they claim that they don’t have enough assets to leave behind. When you take inventory, you may end up realizing that you have a lot to safeguard, making it worth the time and effort that it takes to plan your estate.
Put a Team Together
The next step to take is for you to put together a team of experienced professionals who can help you out. This team should consist of a tax professional, a financial advisor, and an estate planning lawyer. It should be easy for you to do this, since these professionals can be found quite easily. For instance, there are 1.3 million lawyers in the United States, according to Clio.
That said, take your time so that you can find the right professional with whom to work, and this way, you’ll have a great chance of getting the job done fast and correctly. You’re not going to leave out an important detail or two that could have had an impact on the overall state of things.
Make Your Wishes Known
Remember that it’s your estate, so you need to make sure that the professionals with whom you work know what your wishes are. With this in mind, it’s a good idea to have plans in place for something like your health in case you get incapacitated, which will be outlined in your advanced healthcare directive.
This is different from a living will, which is going to outline the medical treatments that you want and those that you don’t want at the end of your life. You should also have a plan for financial decisions if you become unable to make them yourself, and finally, a last will and testament, which will outline beneficiaries, guardians, and executors for your estate.
Plan for Taxes
Don’t forget to make plans for taxes, which include federal and state estate taxes. That’s because your beneficiaries will be liable to pay taxes after they receive their inheritance. To prevent or at least minimize the estate taxes you may have to pay, there are a few measures that you can take.
These include giving gifts to the members of your family or placing assets in an irrevocable trust. The professional with whom you work should be in a position to advise you on the best tax planning strategies for your particular situation.
Power of Attorney
Power of Attorney (POA) is a crucial component of estate planning as it empowers certain people to make decisions on your behalf in the event you become incapacitated.
There are different types of POA that serve specific purposes. A General Power of Attorney grants broad authority to your designated agent and allow them to manage various financial and legal matters on your behalf.
A Limited or Specific Power of Attorney, on the other hand, confines the agent’s authority to specific actions or a defined timeframe.
In estate planning, you might designate someone to handle financial transactions, make healthcare decisions, or both. Choosing agents who are responsible, reliable, and share your values is crucial for ensuring that your wishes are carried out faithfully.
Plan a Will
A will is a crucial document that outlines your wishes regarding the distribution of your assets after your passing. It serves as a legal blueprint to ensure that your possessions go to the people or organizations you want them to. Without a will, the state might dictate how your assets are distributed, which may not align with your intentions. Additionally, a will can help minimize family disputes and provide clarity during a challenging time.
Naming beneficiaries in your will involves specifying who will inherit your various assets, such as property, bank accounts, or sentimental belongings. Carefully selecting beneficiaries ensures that your wishes are accurately carried out, and it’s essential to keep these designations up to date, especially after life events like marriages, divorces, or the birth of children.
Organize Important Documents
Organizing important documents is a fundamental aspect of effective estate planning. Begin by creating a comprehensive document checklist, including items such as your will, financial account information, insurance policies, property deeds, and any relevant legal documents. This checklist serves as a roadmap for both you and your heirs.
Secure storage of these documents is equally critical. Use a safe deposit box, a home safe, or a digital storage solution to safeguard your important paperwork from loss, theft, or damage.
Regularly review and update this information, adapting it to any changes in storage methods or access details to maintain the effectiveness of your document organization strategy.
Keep in mind that making estate plans can go a long way towards helping you safeguard your hard-earned money or even a business that you may have. This includes the investment that you’ve spent on ensuring that your home is comfortable and valuable.
One of these is safeguarding your home from the likelihood of having flood problems. This is an important detail, especially given the fact that more than 14.6 million homes across America are at a high risk of some kind of flooding problem, according to iProperty Management.