Have you thought about estate planning, such as making a will, but haven’t actually taken care of it yet? You’re not alone. According to a Harris Poll, 64% of Americans haven’t completed a will.
Why do so many people avoid writing a will and taking care of their affairs? Some may worry estate planning costs will be high and the process is difficult. Others might feel that their estate is small and they don’t need a will.
However, if you don’t make a will, state law will determine how your belongings and assets will be distributed. This may not reflect your wishes and can take a long time to settle. It can also cost your loved ones additional fees. If you have minor or disabled children, a second marriage, or a serious illness, there can be devastating unintended consequences. That’s why it’s so important to take the time now to complete your estate planning.
Here are the basics of estate planning and what you need to know to get started.
Your First Step Should be Making a Will
A will indicates how you want your assets to be distributed to your family and loved ones. In it, you designate an executor to settle your estate. Your executor will take care of forms and financial tasks such as paying bills, selling your home and distributing your assets. You may also want to appoint an individual to handle your funeral. If you have minor children (under 18 years old), you can choose guardians for them.
Do You Need a Trust?
For those with minor or disabled children, second marriages, ill spouses, substantial or out-of-state assets, a trust might make sense. Many people also use trusts to ensure assets stay in the family and are protected from potential creditors. A trust is a legal arrangement for your assets and property and allows a trustee to manage it. You should work with an estate planning lawyer to make sure your trust is right for you and set up correctly.
Are Your Beneficiaries Up to Date?
In addition to a will or trust, it’s very important to have up-to-date beneficiaries listed on individual retirement accounts (IRAs), life insurance policies and 401(k) plans since they might be worth a lot of money and they’re legal contracts in their own right. Your will does not control who gets these accounts unless you do not appoint beneficiaries. There are important reasons why you want to name beneficiaries instead of having assets go through your Will and don’t forget to name trusts for your minor or incapacitated beneficiaries.
In addition to naming a primary beneficiary, you should name alternative beneficiaries as a backup.
You can also make bank and brokerage accounts “payable on death accounts.” This means you can choose beneficiaries for these accounts so they won’t go through probate. However, realize that this supersedes your Will provisions so you want to be careful to do so thoughtfully.
Remember to Update Your Estate Plan
Once you complete your estate plan, you shouldn’t set it aside and forget about it. Instead, you need to update it regularly, especially if your family or financial situation changes or new laws pass that affect you.
If You Can’t Speak for Yourself
Just as important as Wills and Trusts are documents where you designate individuals to handle your financial and medical affairs if you become incapacitated. A power of attorney is a legal document used to someone to act on your behalf if you cannot manage your own financial and personal affairs. It’s important that you have complete faith in this individual and that you provide them with the information they need about your desires and your assets. You also should appoint a healthcare agent to make medical decisions if there comes a time you are unable to do so. Obviously, it is essential you discuss your values and wishes with them too.
Estate Planning Isn’t a DIY Project
While you might be tempted to save some money by filling out your own estate documents, it makes sense to consult with an attorney who is well versed in estate planning law since it can be complicated. Otherwise you may inadvertently create problems for your family when they try to settle your estate. If you have health issues or have individuals with special needs in your family, then it is essential to consult with an attorney who specializes in this highly specialized type of planning.
To learn more about estate planning, call the Long-Term Living Association (LTLA) at 1-800-868-1193 to set up an appointment with an estate planning specialist. You can also learn more by visiting their website at longtermliving.org.
Elder Law and Estate Planning Specialist