Many people avoid estate planning because the thought of one's own death is often uncomfortable or seemingly distant. Regardless of your age or health, it is important to be prepared in the event that something happens to you. This way, you can make sure that decisions involving your end-of-life matters will be carried out to your specifications. Planning your estate can alleviate the stress and confusion that many families often face after losing a loved one. Below are a few tips to keep in mind while planning your estate:
Gather Important Documents
Keep your birth certificates, marriage certificates, property deeds, vehicle deeds, and other important paperwork in a safe place. Retain a few copies of each of these documents in consolidated packets. Make sure someone you trust will be able to access them upon your death so that the executor of your estate will have an easier time following your wishes.
Write a Will
Without a will left behind upon your death, your possessions are subject to your state's individual intestacy laws, which methodically proportion out your assets to your family. The state's way of divvying up your assets might not reflect your personal preference, so it is important to write a last will so that the things you own will go to those that you designate. Additionally, if you still have minors under your care, a will is used to designate their guardians after your passing. The court will appoint a guardian if you do not specify in your will.
Update Your Beneficiaries
Some of your assets are not covered by a will, such as life insurance, retirement account funds, payable-on-death bank accounts, and property you have joint tenancy with. Even if you list them out in your will, these points will be disregarded. If your family situation changes, make sure that you update the list of your beneficiaries as well as your will. Additionally, if you have yet to set a payable-on-death beneficiary to your bank account, it is a good idea to do so. This will allow your accounts to transfer smoothly while at the same time avoiding the probate process.
Advance directives allow you to outline the terms of your end-of-life care. A durable power of attorney is a type of advance directive in which you appoint a person to make decisions for you in the event that you are unable to do so yourself. This person will be able to make medical decisions for you if you cannot make them yourself. Another type of advance directive is a living will, wherein you detail what types of treatments you would and would not like to receive. This includes things such as tube feeding, ventilation, but also organ donation and body donation. Even without a living will, you can sign a Do Not Resuscitate (DNR) form, which states that in the event your heart or breathing stops, the medical practitioner will not attempt to resuscitate you. Ultimately, advance directives allow you to make the important decisions at the end of your life, ahead of time.
A living trust is a good way to ensure that your assets will be distributed quickly, without estate taxes or having to publicly announce the contents of your possessions. Your assets are placed in the trust, which is administered for your benefit during your lifetime and transferred to your beneficiaries when you die. With a trust, this transfer occurs all without the need for court involvement. This can save your beneficiaries time and money, as well as prevent creditors or lawsuits from gaining your property.
Although these tips are good starting point for estate planning, it is not a comprehensive list of things to sort and account for. Your best option is to find an attorney who specializes in estate planning, as well as a financial advisor, to ensure that you draft the correct documents so that your will is carried out properly. This will give you the peace of mind of knowing that you have full control of what will happen at the end of your life.