Estate planning is a topic that many people don’t like to think about. However, all adults must ensure that they have this taken care of. The last thing that your family members need when you pass away is the stress of dividing everything. Your estate plan does a lot more than that. It can also set up a plan for what is going to happen if you are unable to make decisions for yourself.
There are several things that you need to include in your estate plan. Each serves a specific purpose. As you go through this list, you might find that you don’t need some but that you do need others.
- Will: Your will outlines who is going to receive your assets. You won’t cover anything that is being transferred by another method in the estate plan. When you create the will, ensure that it is done properly so that it will be valid when you pass away.
- Trusts: You can put assets into trusts to transfer them to others upon your death. There are other benefits, depending on the type of trusts you establish. A special needs trust, for example, can provide for an heir without impacting their eligibility for need- or asset-based programs. Other trusts, namely irrevocable ones, can protect the assets from creditor claims.
- Guardianship: A guardianship is critical for a parent who has minor children. This sets up a plan for who is going to care for the kids if both parents pass away. You should discuss the designation with the person who is named to ensure they are willing and able to handle this task.
- Powers of attorney: The powers of attorney place someone else in charge of making financial and medical decisions for you if you can’t make them for yourself. You can name the same person for both areas. However, you don’t have to. Think about who can handle each set of decisions and plan accordingly.
- Letter of intent: Your letter of intent isn’t a legally binding message. Instead, it is meant to help your beneficiaries and executor to know more about your estate plan. You can write out your reasoning for the decisions you make, provide information about where specific accounts are held and note the location of important paperwork like deeds or insurance documents.
- Beneficiary designation: Some of the assets that you own are governed by the payable on death designations. You don’t include these in the estate plan, but you can leave a list for the people who will handle your estate. The assets impacted are ones like bank, investment and retirement accounts, as well as life insurance policies.
If you have any questions, be sure to get them answered before you finalize your plan. Sometimes, people who have experience in this area can give you options to help you achieve your goals.