Estate Planning: Important Steps to Set Your Family Up for Success
Estate planning is not most people's favorite topic. Who wants to plan for what happens after they die? I know I didn’t when I first started thinking about it.
Unfortunately, it’s something we all need to come to grips with because estate planning is absolutely crucial, even if you don’t think you have much of an estate. You want to decide what happens to your estate after you leave, whether that day comes tomorrow or in eighty years.
For most people, estate planning happens when they hit a major milestone like a marriage or when they have their first child. If you haven’t created a will and you’re already past one or more of those major milestones, I recommend that you start creating one now.
Proper estate planning will also speed your estate through the probate process. Probate is the first step in the legal process of transferring the estate and it includes resolving claims and distributing property. If you don’t have a will that explains how you want your assets distributed, the probate process becomes more cumbersome and takes much longer to execute.
4 Key Estate Planning Steps to Start
1. Create a Will
A will lets you determine what happens to your assets after your death and the named executor will take care of the execution of the will. It’s very important that you create and properly execute the will because otherwise the state will decide what happens to your assets. If you’ve ever been to the DMV to get a license, you have a sense of how timely the state acts. Don’t put your assets in the hands of a bureaucrat when you can make them yourself.
2. Name Beneficiaries
After creating a will, make sure you have named beneficiaries for all of your financial accounts. These are for accounts like an insurance policy, annuity, pension plan, and IRAs. Having a named beneficiary means that they will receive the assets at the time of disposition according to your allocations.
3. Get Advice
Speak with an estate planning professional in your state. Different states have different laws when it comes to estate planning and a planning professional will be able to help you navigate those tricky avenues. There are some things you can do yourself with the help of planning books and software, so don’t feel compelled to pay a professional, but it may be worth it.
4. Consider your family’s needs
If you have kids, be sure that your will names guardians for your children under the age of 18. Do you want your parents to take care of them? A sibling? Your in-laws or perhaps your spouse’s siblings? Maybe a close friend? Will you establish a trust for your children or give part of your estate to the caregivers? These are all issues that you, rather than the state, should decide.
Estate planning is not fun but we do it because we know what’s best for our families. Do you have a story to tell on how you made these big decisions in your life? Share them with our community!
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