Nobody wants to contemplate their own death, but planning your estate is imperative to ensure that your loved ones have what you want them to have. Estate planning and wills are tools to be utilized to divvy up your assets and make your final wishes known to friends and family.
With the right documents in place, you can rest easy knowing you’ve done everything in your power to convey your desires to those you leave behind.
What do you need to know about getting started with estate planning and wills? This guide will walk you through the basics before you consult with a professional.
Decide Your Estate Planning Goals
The first thing you need to do is establish the goals you have for your estate. For most people, the most time-consuming stage is determining who will inherit their many assets. Decide not only who gets what, but also how much they will each receive. You may not want to leave it all to one person, making the division equitable among children and grandchildren.
This is also a great stage for you to consider your final wishes. Think about how you would want a medical situation to be handled if you were unable to make decisions. Beyond medical care, it can be helpful to share your ideas for funeral arrangements and other end-of-life decisions.
Inventory your Assets and Debts
Before you can divvy it up, you have to have a realistic picture of your estate. The best way to see what you have is to inventory your assets and debts.
For assets, make a list of:
Checking and savings accounts
Real estate
Vehicles
Investments (stocks, bonds)
Retirement accounts
Life insurance policies
Business assets
Personal valuables (jewelry, artwork, heirlooms, antiques, collectables)
Other (annuities, pensions)
For debts, look at things like:
Secured debts (mortgages, car loans)
Unsecured debts (personal loans, student loans, credit card balances)
Medical bills
Business debts
Unpaid taxes
Establish Estate Planning Documents
Once the foundation is laid for estate planning, there are a few documents you will want to have in place. Oftentimes, it is best to work with professionals who can guide you through the process and ensure that you don’t forget anything. They can assist in drafting paperwork verbiage that is legally sound while still allowing you as much flexibility as possible.
Here are some of the documents that a professional may recommend and help draft.
Last Will and Testament
This is the document that most people will obsess over and frequently fine-tune. A last will and testament is the directive for how your assets are distributed upon your death.
This document is there to outline who your beneficiaries are and decide who gets what. It can also be the place where you specify your funeral arrangements and name guardians for any minor children who may outlive you.
Even though a will generally does not override any beneficiary designations, it’s still a valuable tool to provide clarity and direction in your estate plan.
Power of Attorney and Health Care Directive
What happens if you find yourself unable to make medical decisions for yourself? Your power of attorney and health care directive grant someone else permission to make the decisions on your behalf.
It’s best to make sure you have detailed conversations with this person early so that they know what your wishes are, but a power of attorney allows them to sign off on things on your behalf.
Trusts
A trust is an effective estate planning tool that can help ensure your assets are protected from taxes and lawsuits. When you set up a trust, it often removes assets from your estate and allows them to bypass the probate process. Some trusts, like charitable remainder trusts, even allow beneficiaries to pull an income from the trust for a set period or for their lifetime.
Beneficiary Designations
Last but not least, set up beneficiary designations for all relevant accounts. Think about your 401(k), life insurance policy, and other accounts that may hold significant wealth at the time of your passing. Keep these designations updated as time passes. Remember that a will or trust does not control assets with a beneficiary designation.
Store and Organize Your Documents
Once you have these documents in place, what should you do with them? The most important thing you can do with important documents is keep them in a safe place. Make sure that all the necessary people know exactly where to find them and how to access them. This could be as simple as placing them in a safe deposit box or a fireproof box in your home.
You may also consider getting organized for your loved ones with a password manager. This allows your loved ones to manage your logins for bank accounts, insurance policies, and more. If they have access to your accounts, this can ease the transition after your passing and make it far easier for them to close out your accounts and see the status of the estate.
Seek Professional Assistance
When it comes to estate planning and wills, you don’t want to leave anything to chance. As much as you care for your loved ones, a lot can change with your passing. They may forget your wishes, or worse, fight amongst themselves. Assets could be lost to creditors, or mistakes in the paperwork could tie up your estate in probate for months or even years.
Rather than take the risk, consider working with professionals who can manage everything in one convenient package. This can help ease the transition for your loved ones, ensure sound documentation, and provide a fair and unbiased voice in case of estate disputes.
Magellan offers comprehensive estate, financial, legal, and tax planning services so that you get the help you need all under a single roof. If you are ready to tackle your estate planning here and now, give us a call today to start organizing your estate!
For a comprehensive review of your personal situation, always consult with a tax or legal advisor. Neither Cetera Advisor Networks LLC nor any of its representatives may give legal or tax advice.
This material provided by Kevin Meaders was written by Axle Eight, a non-affiliate of Magellan Planning Group and Cetera Advisor Networks LLC.