Estate Planning Tips
This Estate Planning tips and suggestions list will help ensure that you consider important topics when creating your estate plan. Estate planning can be complex and it is wise to do some research before you begin speaking with an estate planning professional so that you know what questions to ask about topics that are important to you. An estate plan is a legal document or group of legal documents such as a will, living trust, advance healthcare directive, or spill-over will, that is used to plan for what happens to your estate upon your passing or for your care in case you become incapacitated. These estate planning tips and suggestions will help educate you on what you can accomplish with estate planning and things to consider.
Have a will drafted:
A will can accomplish a variety of things when it comes to estate planning. For instance a will declares those who will inherit your property after your death. Your assets will be dispersed in accordance with your states intestate succession laws if you pass away without a will, which may not be in accordance with your own wishes. A will can allow you to designate a guardian for non-adult children if that is applicable to your situation. With a will you can also donate specified assets to charity(s) of your choosing. Wills are inexpensive to create and can even be created free of charge using websites such as https://www.freewill.com.
Consider Setting up a Revocable Living Trust
A living trust is a legal tool for estate planning that allows a person (known as the Trustee) to hold another person’s (known as the Settlor or the creator of the trust) property for the benefit of someone else (the Beneficiary). It is an estate planning tool that can help family members and beneficiaries avoid a potentially lengthy probate process. A living trust is a legal document which lays out the terms of the trust and the assets that the grantor has assigned to it.
Create a Financial Power of Attorney
Who will make your financial decisions if you are not able to make them for yourself? That is where a Financial Power of Attorney can help out. With a financial power of attorney you can determine that the power of attorney comes into effect when you are incapacitated and ends when you pass away. You designate a trusted agent to work on your behalf and make important financial decisions for you, when you are unable to do so.
Execute an Advance Health Care Directive
Much like a Financial Power of Attorney, you may want to designate a trusted person to make health care decisions for you if you are unable to do so. An Advance Health Care Directive can help you accomplish that. An Advance Health Care Directive, is a Health Care Power of Attorney that describes what medical procedures you do or do not want to receive and designates a health care agent who will make health care choices on your behalf.
Make a Plan for your Funeral and Related Expenses
Your passing is likely to be a very difficult time for your loved ones. The easier you can make the situation for them, the better. It is advised that you communicate your wishes for your funeral and put money aside to pay for it. Doing so can help take some of the stress off of your loved ones as well ensure that your funeral wishes are carried out as you desire.
Review Your Life Insurance and Designate Beneficiaries
Depending on your financial situation and the needs of your family, Life Insurance can be a valuable estate planning utility. Life insurance is one way you can provide financial support for loved ones after you die. When you open a life insurance policy, you will pay a regular insurance premium in exchange for coverage. As long as your policy is active when you die, the insurance company will pay out a death benefit to your life insurance policy beneficiaries. Term, Whole Life and Universal are the three most common life insurance policies types. The following is a brief overview on each of them:
Term Life Insurance:
A term life policy lasts for a specific period of time, typically up to 30 years. During the term, the policyholder makes fixed premium payments in exchange for a guaranteed death benefit. Under a term life policy, coverage ends at the end of the term. Your insurance provider may offer to extend the coverage to another term or convert it to a permanent policy. Typically Term Life Insurance is the least expensive type of life insurance.
Whole Life Insurance:
With Whole Life Insurance, as long as you pay your life insurance premium, the policy will remain active for the entirety of your life. With most whole life insurance policies, the policy premium and death benefit are fixed. Whole life insurance also has a cash value component, which grows over time. You may be able to withdraw from or borrow against the cash value portion of your policy while you are living.
Universal Life Insurance:
Universal life insurance is similar to Whole Life Insurance but potentially offers additional flexibility. Universal life insurance is a type of permanent life insurance. With a universal life policy, the insured person is covered for the duration of their life as long as they pay premiums and fulfill any other requirements of their policy to maintain coverage. Like many permanent life policies, universal life insurance combines a cash value feature with lifelong protection. When you pass away, the policy’s death benefit is paid out to your beneficiaries. Unlike whole life insurance, universal life insurance typically offers more flexibility. You can typically change your death benefits and premiums to accommodate changing circumstances.
You can learn more about Universal Life Insurance here.
With Life Insurance, it is important to update your beneficiaries on any existing policies. Doing so can help ensure the right person will be able to claim benefits when you pass away and avoid conflicts with your estate planning documents.
Create a List of Accounts, Debts and Liabilities
Before you begin your estate planning, it makes sense to get organized and create a list of all of your assets and debts. Make a list of all of your checking, savings, investment, retirement and pension accounts. Also create a list of any money that is owed to you. Additionally you should create a list of all of your liabilities with any debts you owe. Doing so will greatly help with the creation of your estate planning documents and also help the Executor of your estate once you have passed.
Review and Keep your Estate Planning Documents Current
As your life changes, so should your estate planning documents. It is recommended that you review your estate plan annually and or make updates to it as life events occur. Assets such as retirement funds, investment accounts and life insurance policies often have designated beneficiaries and assets with beneficiaries may pass outside of probate, so it is important to keep this information up to date.
Organize Important Documents and Notify Family Members of the Location
A will does you no good if it cannot be located. It is advised that you store your important estate planning documents such as your will, funeral arrangement plans, insurance policy(s), asset and liability information and trust documents a safe and secure location that trusted members of your family are aware of and will have access to if you pass.