Estate planning is essential to create a stable financial life. It requires well-thought-out strategies to generate wills to beneficiaries. Document your wishes so that courts can decide what to do with your estate after you have passed away. Start with these tips to help begin your path in creating a stable financial foundation for your family.
Create and Sign a Will
A will help ensure your chosen beneficiaries will acquire the assets you leave for them after you die. Name an executor in your will. This person will have the power and responsibility to pay any lingering debts. The individual will also distribute the remainder of the estate according to your documented wishes.
You can seek the help of an estate planning professional like Brian Douglas to help you cover all the corners of your will. If you pass away without a will, the state’s laws of intestacy will give your properties to your surviving dependents. Several states will split properties with your children and spouse. If you don’t have a child or spouse, you need to have a preferred friend to inherit your assets.
Another option is to use a revocable living trust. Living trusts avoid probate, unlike wills. Probate is the process in which a court decides if the documented will is valid. Certain states require numerous procedures for people to file for probate. Hence, it may not be an ideal solution because of the money and time consumed. You still need a will to become the cornerstone of your estate plan if you opt for a living trust. A will allows you to name a guardian for your minor children. If you don’t have a will when you die, a court decides the guardian for your children.
Calculate Net Worth
Include the following items when calculating your net worth:
- Bank and investment accounts
- Retirement plans
- Personal properties like pieces of jewelry, cars, and collectibles
- Life insurance death benefit
- Business interests
- Oil and mineral rights
- Real estate
Subtract all of these components from a list of all your liabilities (e.g., car and student loans, mortgages, and credit card debts). You may also use the connection between real estate and technology to help calculate your net worth. After getting a figure, check federal estate taxes if your estate is liable. Also, verify if your state assesses inheritance and estate taxes.
Name Your Beneficiaries
Understand that all your assets won’t go to your survivors, thanks to your will. This is because specific properties won’t go through probate. For example, if you have a house under joint ownership, and your spouse owns the right to survivorship, your partner will acquire a portion of the home after you die. Also, the 401k, life insurance policies, and individual retirement accounts will be passed to your registered dependents based on your documents.
Show your attorney a copy of your estate plan and the filled beneficiary forms. It’s through this process that you can see specific components that need changing. For example, you may have a brother whom you haven’t seen in 26 years, and you already have three children and a spouse. If your brother is still listed in your estate plan as a beneficiary, then you may want to change that piece of information.
Create a Plan if You Become Mentally Incapacitated
Preparing for your estate requires a good disability plan. Without this, your properties and assets may result in a state court with a guardian or conservator supervising your assets. This issue will lead to your family or beneficiaries losing control of your property. To avoid having your assets supervised by the court, create a good disability plan that will ensure your assets will still be rightfully distributed even if you become mentally incapacitated.
Assess the Need for an Advanced Estate Planning
If you already have a sound estate plan, consider the need for advanced estate planning. It might become critical for people who have valuable and taxable estates. Advanced plans go beyond the basic foundation of estates. You can use the additional benefits to:
- Reduce estate taxes
- Create a legacy
- Keep assets safe
After creating or editing your estate plan, don’t forget to review the documents. Designate a date when you can evaluate your strategy. You don’t know what the future holds, so there might be specific scenarios that might provoke you to change particular components of your plan. For example, you might get divorced, or perhaps you’re considering adopting one or two children in the next few years. Use these brand-new pieces of information for your estate plan to cover all of its aspects.
Planning for the future is always beneficial to avoid complications from arising, especially when you have already passed away. Having an estate plan will ensure that your wishes are followed precisely the way you want them to, allowing your beneficiaries to receive their proper inheritance.