Estate planning ensures that you distribute your assets according to your wishes after your death. It also allows you to prepare for potential incapacity. While the process might seem overwhelming, breaking it down into steps makes it more manageable. Here are the key actions you should take when planning your estate.
Assess your assets and liabilities
Start by creating a list of your assets. These include real estate, bank accounts, retirement funds, personal property, and investments. Also, note any debts you owe, such as mortgages or loans. Knowing what you own and owe will guide your estate plan.
Create a will or trust
A will is a legal document that specifies how to distribute your assets after your death. It can also designate guardians for minor children. A trust gives you more control over when and how to distribute your assets and can help you avoid probate. Depending on your needs, you may choose to create one or both of these documents.
Name beneficiaries
Make sure to designate beneficiaries for your financial accounts, insurance policies, and retirement plans. These designations ensure your loved ones receive the benefits without going through probate. Review your beneficiaries periodically, especially after major life events, to ensure they reflect your current intentions.
Choose an executor or trustee
The executor will carry out the instructions in your will after your death. The trustee will manage your trust and ensure your assets are distributed according to its terms. Select someone you trust who has the organizational skills and ability to handle financial matters.
Plan for incapacity
Estate planning should also address what happens if you become incapacitated. Create a durable power of attorney to give someone authority to make financial decisions on your behalf. A healthcare proxy or living will lets you appoint someone to ensure that your medical preferences are followed.
Review and update your estate plan regularly
After creating your estate plan, make it a habit to review and update it regularly. Major life changes like marriage, divorce, or the birth of a child may require you to adjust your plan. Keeping it up to date ensures that it always aligns with your current wishes.
Taking these steps now will save your loved ones stress in the future and provide peace of mind that your wishes will be followed.
