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Estate Planning
When you think of estate planning, do you envision a gated stone manor house surrounded by rolling hills?
While that is one type of estate, the one we’re referring to is the property left by a person at death. There is a tongue-in-cheek expression that says your estate is what’s above the ground when you’re put six feet under. A little blunt, perhaps, but certainly a clear definition for sure.
Estate Planning is the “who gets what and how do your financial obligations and final expenses get paid” part. We all know that we have to pay our debts at death and some taxes, but with a little organization, you may be able to minimize that tax impact and preserve more of your assets for your heirs.
Start with a Will
Your first step is to draw a will. (And not on the back of a napkin.) A will defines what happens to what you’ve left behind and lets your wishes be known. Even if you don't have children, there are people in your life who will inherit your property. Your wishes for passing on those possessions are up to you. You need to put your desires in writing. A will can take care of most of that communication.
Over time, your goals will change, and circumstances change. So, just as you should periodically review your financial plan, you should also periodically review your “estate plan” and your will. This is particularly true if you’ve had an event or life “trigger” occur. Triggers are things like marriage, divorce, a loved one's death, a new child, or starting your own business.
What Makes Up an Estate Plan?
Obviously, this depends on your individual situation, some plans will include more than others. Some also depends on whether you choose to include things like a living will. Your attorney can help you with all the questions you’ll have.
The major parts of an estate plan may include:
- A will
- Insurance (life, health, disability, and business-related)
- Power of Attorney, Medical Directive, and other documents
- Living Trust
The Estate Planning Checklist When you make plans for your estate, be sure you have addressed the following areas:
Draw Your Will
Have a will with a named an executor / executrix or trustee. You have to have confidence that this person will carry out your wishes and you should ask that person ahead of time if he/she will do this for you.
Set up Trusts
Many people find that one or more trusts are needed to allow their estate to pass to their heirs the way they want them to. Your attorney can help you determine if one or more trusts would be appropriate for you.
Talk to All Interested Parties
You certainly don’t have to reveal your plans to everyone in your will, but you should discuss thing like executorship and guardianship roles and gain agreement from those people to fulfill that role.
Purchase appropriate life insurance
For many, life insurance is an integral part of your estate plan. Life insurance can provide cash at time of death that may facilitate the passing of your estate and payment of taxes. Your financial professionals will help you with those details.
Consider a Living Will
This is a medical directive that names someone in charge who has your health care proxy in case you become incapacitated. This ensures that your wishes get carried out when you don’t have the ability to speak for yourself.
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