One of the most crucial things you can do for yourself and your family is estate planning, sometimes known as end-of-life planning.
Your estate plan is a road map for deciding who will look after your kids, pets, and the possessions you worked so hard to amass when you pass away. If you are unable to make decisions for yourself, your estate plan may specify who will make decisions regarding your medical care. Without an estate plan, some of those decisions will be made for you by the state’s laws and courts, who might not be aware of your preferences.
Everyone needs to make arrangements for their death. However, because no one like contemplating what will happen when they pass away, estate planning is also one of the simplest things to put off. In reality, only 4 in 10 adults in American have a will or living trust.
We are aware that beginning end-of-life planning can be challenging. For your benefit, we’ve put together this straightforward tutorial. We’ll take you step-by-step through the fundamentals of estate planning.
What exactly is an estate plan?
An estate plan serves as a roadmap for your loved ones, dependable experts, and the legal system to ensure that your intentions are carried out after your death or incapacitation.
Your home, personal property, financial assets, family heirlooms, jewelry, and even digital money are all included in your “estate.”
The several documents that make up an estate plan address issues like how to divide your assets, who will look after your dependents, and how to handle medical emergencies.
Your family, situation, priorities, financial condition, and the state in which you reside will all affect the precise paperwork and components of your estate plan you use.
Do I need an estate plan?
Absolutely! Even if you don’t have any children or valuables, every adult should have an estate plan.
The state will intervene to decide what happens to your assets and who your heirs are if you pass away without a will (dying intestate). Your assets might be restricted by the probate process. For your loved ones, this process adds time, stress, and additional expenses. It also may leave a completely different legacy than the one you would choose.
You should establish an estate plan in particular if you have:
- A spouse or partner. If you pass away without a will, your spouse will likely inherit your property, but this is not always the case. Your estate plan ensures that your spouse gets the assistance they require.
- Children, pets or other dependents. you must designate who will be their guardian in the event that something happens to you in your estate plan. You can allocate money for their care in your estate plan as well.
Why do I need an estate plan?
The benefits of having an estate strategy include:
- To avoid family disputes over your estate.
- Assist in lowering estate taxes for your heirs.
- Assign your dependents a guardian or guardians.
- Cut down on the amount of time and money needed for the court to settle your estate.
- Permit you to select the inheritors of particular property, goods, and other items.
- Ease the stress on your loved ones when they are grieving by outlining the plan for your funeral.
- If you are unable to make your own medical decisions, choose a trusted person to act on your behalf.
- If you are unable to manage your funds on your own, entrust them to a loved one or reliable counsel.
Making an estate plan
Step 1: Choose whether or not to consult an expert.
Choosing whether to enlist the aid of experts like an estate planning lawyer or a financial advisor is the first step in developing an estate plan. These professionals can assist you in managing more complicated estates and making sure that your plan is completely sound.
While consulting with estate planning professionals would be beneficial for everyone, you would want expert assistance if you:
- Own a second house or other property out-of-state.
- Have a girlfriend/boyfriend/partner with whom you are not legally married.
- Are divorced or have a child custody arrangement.
- Have a blended family or remarried, especially if you have kids.
- Prefer that only specific people (or no one) can get access to you at the hospital.
- Have concern about federal or state gift and estate taxes.
With 4Privacy, you can add your attorney, financial advisors, insurance agents and any other advisors to your Trusted Contacts list, then may share folders containing your estate plan with them. You can also share with family members that you would like to keep informed.
Step 2: Make a list of your physical assets.
Make sure you are accounting for all of your things before deciding what will happen to them.
Everything of worth, such as your home (if you own it), cars, jewelry, artwork, antiques, personal heirlooms, computers, televisions, power tools, and other devices, should be listed.
If you’re a bit overwhelmed trying to think of everything, 4Privacy is here to help! Within each folder in your 4Privacy Vault, you’ll see a list of suggested items that you can add or list. We’re here to help so you don’t have to start from scratch!
Better yet, you can provide details regarding the assets that your loved ones will need to know. You can share everything from account numbers to personal or family stories.
Step 3: Make a list of your digital assets.
More and more, we spend our lives both in the physical world and online. Estate planning must therefore consider your digital assets and life.
Make a list of all your cryptocurrency, payment apps (like PayPal and Venmo), email and social media accounts, and crucial passwords.
You should keep the majority of your digital estate plan out of your will. Your critical passwords and accounts should not fall into the hands of strangers because your will becomes public after your death. You don’t want to have to update your will each time you change your password or open a new account because the digital world is likewise changing more quickly than the physical one.
You can either find a secure area where your family members can view the information, or you can list all of your significant digital accounts and passwords in the Passwords section of 4Privacy.
Step 4: Make a list of your debts.
The next step is to make a list of every debt you have, including credit card debt, home debt, personal loans, auto loans, and private student loans.
You should include account numbers, the companies’ contact details, and information on where to find any relevant agreements or documents on your list.
Make copies of your lists of assets and debts for your partner, your executor, and estate planning professionals once you have finalized your list of debts. Additionally, you may invite them to join your 4Privacy account as Trusted Contacts.
Step 5: Verify and update the beneficiaries on your insurance and retirement plans.
Verifying and updating the beneficiaries on your financial accounts and insurance policies is a crucial element of estate planning. No matter what your will specifies on how your assets are to be distributed, if you have named a beneficiary, the account will pass to them.
You may update your beneficiaries online for many accounts. To verify and change your beneficiaries, you might need to get in touch with your company’s plan administrator if your 401(k) or life insurance is offered through your place of employment.
Step 6: Select a trustee and guardians (if you have children).
The executor selection process comes next. An executor is a person appointed to oversee the carrying out of your last will and testament and ensure that your instructions are followed.
It can take many hours of phone conversations, documentation, diligence, and years of work to carry out a will. It is crucial to select an executor who can get things done because of their administrative and organizational skills.
Because they are aware of the potential emotional suffering this responsibility may bring, some people decide against appointing a close relative as their will’s executor. Whatever you decide, you should let your chosen executor know and ask them if they can take on the responsibility because it is a significant commitment on their part.
There may be more than one executor named. It is crucial to remember that your executors would have to agree on every choice, which could be problematic during such a trying time. If you choose more than one executor, all of them must jointly sign documents.
Additionally, it’s a good idea to choose a backup in case your first pick is unable to carry out the tasks.
Step 7: Create a will.
It’s time to start drafting the documentation for your estate plan once you have your lists of assets and debts as well as your executor in place. The foundation of your estate plan, your will, is where to start.
For less than $1,000, many attorneys will work with you to draft a will. Your will should include:
- Assets and property. The possessions and assets you are leaving to your loved ones, such as grandma’s ring, your 401(k), and the deed to your home.
- Beneficiaries. Those who will get your property and assets as an inheritance.
- Custodian/Trustee. Managing funds in a trust account on behalf of a beneficiary who is a minor is the responsibility of an adult custodian known as a trustee.
- Executor: A person in charge of administering your will and closing your estate. An administrator or personal representative is another name for an executor.
- Guardian(s). The person or individuals chosen as your child’s and/or pet’s guardian(s).
- Instructions for handling money, allocating funds, and paying off debts.
- Instructions for the funeral or burial.
- Gifts made to people or organizations.
It’s time to sign and notarize your will once you’ve created it with the help of your attorney or an online service provider. An unsigned will is insufficient evidence of your intentions, even though a probate judge might follow its directions if there is cause to believe it represents your genuine wishes. If your will is not signed, there is no assurance that your desires will be honored.
You must sign your will in front of two witnesses as per protocol. In order to validate your will, they will also sign it.
Although it isn’t required in the majority of jurisdictions, signing your will in the presence of your two witnesses and a notary is an additional safety to ensure that it is enforceable. Most banks and credit unions offer notary services for no charge, while some UPS locations charge a small fee. For an additional cost, you could engage with a mobile notary who would visit your house or workplace.
Although more states are allowing the use of internet notaries, you should check your state’s regulations before doing so for your will.
Step 8: Complete your estate plan.
Now that your will is finished, you can finish the remaining estate planning documents.
Two of the most popular legal forms, a power of attorney and a living will (advance healthcare directive), are covered in detail in this blog.
The information provided on this website does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available on this site are for general informational purposes only.
