Published On: July 19, 2021

How to get started with estate planning

Estate planning gives you the opportunity to decide well in advance who will handle your estate in the event of your death or incapacitation.  Thinking about your own passing is never a fun exercise, but it is necessary if you intend to leave a plan for your caretakers and loved ones to ensure that your wishes are carried out and they are taken care of in the long term.

It’s important to remember that nothing is set in stone, and you can adjust your plan as your personal and financial situation changes. Estate planning may seem overwhelming at first, but if you follow the key steps below, you will have a plan in no time.

Make a list of your stuff

When thinking about your stuff, consider both your tangible and intangible assets.

Tangible assets include items such as:

  •   Property like homes, land or other real estate
  •   Vehicles including cars, trucks, motorhomes or boats
  •   Collectibles such as antiques, comic books, or art
  •   Any other physical personal possessions

Intangible assets include:

  •   Bank accounts like checking and savings accounts
  •   Stocks, bonds and mutual funds
  •   Life insurance policies
  •   Retirement plans including 401(K) plans, 403(B) plans and individual retirement accounts
  •   Health savings accounts
  •   Business ownership

After you have listed your tangible and intangible assets, list the value of each asset. Even if you don’t know the exact value, an estimate is a good place to start. Consider seeking out valuations if certain items like a precious antique, or your car for a more precise number.

Consider what your family will need when you pass

After you’ve tallied up your assets, consider who you want to receive each one. Make sure to note who specifically you want each individual asset to go to, or if you want them evenly spread out between several people.

Consider adding to your assets in a way that will help your loved ones once you’re gone. They’re likely to have a lot of immediate expenses like funeral costs, and a lot of long-term expenses like mortgage payments. Life insurance is a way to protect your family after you’re gone. If you have a spouse and dependents, a life insurance policy will help them to continue to pay the bills and save for bigger expenses like retirement or a college education.

Consider naming a guardian for your children. If something were to happen to you, naming a guardian can make the transfer of guardianship seamless. Similarly, you should document your wishes for your children’s care, so the new guardian has a sense of your wishes.

Establish a pet trust

Legally, pet animals are considered property. Because of this, they cannot inherit money or property when you pass. However, you can establish a pet trust with funds that you intend to take care of them after you’re gone.

Consider donating your assets

Did you know that you can donate your money and other assets after you’re gone? If you wish, you can designate all or some of your money to go to a non-profit organization as a gift. You can also give in-kind donations of your possessions. For example, if you own an antique car, you can direct that it be donated to an automobile museum when you pass.

Name a durable power of attorney

Estate planning is about what will happen with your assets when you’re gone, but it is also about how things will be handled in the event that a medical issue prevents you from being able to make decisions for yourself. A durable power of attorney (DPA) is typically a trusted relative or friend who will handle your affairs after you can no longer manage them yourself. The difference between a durable power of attorney and an ordinary power of attorney is a DPA has authority if you become incapacitated.

Create an advance health care directive

With a healthcare directive, you name a healthcare agent or proxy who ensures that your medical wishes are carried out in the event that you cannot decide for yourself. You can also document what you want them to decide for you in certain situations.

Organize your files

In the digital age, there will likely be account information for online programs like Online Banking, investments, insurance that the person in charge of carrying out your wishes will need to access. There will likely also be paper copies of original documents. Organize your digital files and passwords in a secure way that can be accessed by your executor, the person appointed to carry out the terms of your will. Paper copies should be kept in a safe, or in a safe-deposit box at the Bank.

The process of estate planning may bring up uncomfortable feelings, but ultimately it is a way to ensure your wishes are carried out. Thinking through different scenarios and having a plan will most likely make you feel better and will certainly make things easier for those you appoint to carry out your wishes.

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