Estate planning is the process of proliferation and distribution of your assets to minimize taxes and expenses while maximizing the value of your estate for your beneficiaries.
It’s essential to have an estate plan in place because it gives you peace of mind, cognizing that your family will be financially secure if something happens to you.
It also allows you to control how your assets will be distributed after you die. Your house, car, savings account, and life insurance policy qualify as your assets.
Without an estate plan, the state will determine the distribution of your assets. It means that your assets could go to people you don’t want them to go to, or the government could take a large portion of your estate in taxes.
What Do You Need to Do?
We all realize that even the best estate planning can go wrong without a fail-proof procedure.
There are, however, some key things you can follow to ensure your estate plan is as watertight as possible:
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1. Collect All Your Documents:
Documents – they are everywhere. In the drawer, on the table, in the car. Gather them all up and put them in one place. It includes your will, trust documents, property deeds, and financial statements.
Why is it important? Well, first of all, it’ll be much easier for your executor to find everything they need when it’s all in one place. Secondly, it’ll be easier for you to keep track of everything and ensure everything is up-to-date.
We would also highlight, for your ease, that you should keep digital and physical copies of your documents.
If you opt for online estate planning, these documents will be stored securely and backed up. If you go the old-fashioned route, keep your documents in a fire-proof safe.
2. Update Your Documents Regularly:
Some people absolutely detest the idea of updating their documents. They put it off for years, procrastinating until it’s too late. But make it known, it’s much better to be safe than sorry.
Your life constantly changes, which means your estate plan should change too. As soon as there’s a significant change in your life – like getting married, having a child, or buying a property – you should update your estate plan accordingly.
How does it help? Well, for starters, it ensures that your assets are going to the right people. Secondly, it minimizes the chances of your estate plan being contested.
3. Execute a Last Will and Testament:
A will is a document that entails how you want your assets to be distributed after you. It’s one of the most important documents because it gives you control over what happens to your belongings.
It’s also worth noting that a will doesn’t have to be complicated or expensive. You can easily find templates online or hire a lawyer to draft one for you.
What’s important is that your will is clear, unambiguous, and meets all the legal requirements in your state.
If you don’t have a will, your assets will be distributed according to the laws of intestate succession.
4. Organize Your Debts:
Debts tend to pile up on us when we’re least expecting them. Before you know it, you’re buried under a mountain of debt and don’t see a way out.
While you can’t do much about your current debts, you can take steps to ensure that your loved ones don’t have to deal with them after you die.
A pragmatic way to do this is to create a list of all your debts and make arrangements to have them paid off after you die. You can do this by including specific instructions in your will or setting up a trust.
Like credit card debt, some debts can be discharged after you die. But others, like student loans and mortgages, will have to be paid off by your loved ones.
Who will do it for you? You might be thinking, “I can do all this myself. I don’t need anybody’s help.” And you’re probably right. But there’s one thing you should always get help with regarding estate planning: hiring the right person.
5. Hiring a Qualified Estate Planning Attorney:
While you can do a lot of the work yourself, we recommend hiring a qualified estate planning attorney.
Why? Because they have the proficiency to ensure everything is done correctly. They can also give you peace of mind knowing that your estate plan is in good hands.
If you’re contemplating how to pick the right estate planning attorney, here are a few things to keep in mind:
- Look for someone with experience.
- Check their credentials.
- Ensure they’re a good match for you.
- Get referrals from people you trust.
6. Update Your Beneficiaries:
It’s not an easy talk to have, but it’s important to make sure your loved ones are on the same page regarding your estate plan. It includes updating your beneficiaries.
Your beneficiaries are the people who will receive your assets after you die. You can highlight anyone as a beneficiary, including family members, friends, and even charities.
It’s important to update your beneficiaries regularly because your relationship with them might change over time. For example, you might get divorced or have a falling out with a family member.
If you don’t update your beneficiaries, there’s a chance your assets will go to someone you don’t want them to go to. So, make sure you keep your beneficiary list up-to-date.
7. Plan Your Final Arrangements:
No one likes to think about their death, but planning your final arrangements is critical. It includes organ donation, funeral expenses, burial or cremation, and other end-of-life expenses.
Spain and the United States had the highest rates of deceased organ donors among OECD nations in 2020, with almost 38 persons per million people. By planning, you live the rest of your days knowing that you will be able to save someone else’s life even after you’re gone.
Why should you put yourself through it? Because it’s one less thing your loved ones will have to worry about when you’re gone. And if you can make their lives just a little easier, it’s worth it.
Estate planning is not a one-time event. It’s something you should review and update regularly. We recommend doing it at least once a year.
But even if you only do it once in your lifetime, it’s still better than not doing it at all. Therefore, if you haven’t started estate planning, now is the time to do it.
Trust us, the peace of mind it will give you is worth it.
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