Your estate plan is a roadmap that outlines how to pass your assets to your loved ones – either during your lifetime (for various reasons such as medical care planning) or after your death. This includes choosing a trusted person to make financial and medical decisions on your behalf if you are unable to do so.
Identifying and Calculating the Value of Your Assets
Make a detailed list of your assets and calculate their value. The list should include real estate, bank accounts, retirement policies, life insurance, investment accounts, and any other accounts or policies you own. Be sure to include any valuable items and belongings you wish to give to specific people.
Identifying Your Beneficiaries
Once you’ve prepared your asset list, decide how you want to pass on your estate. You can choose anyone you want, subject to your state’s laws. For example, some states may not allow you to disinherit your spouse, and there are elective share laws regarding forced inheritance.
Choosing an Executor
After deciding how to distribute your estate, choose an executor for your will. They will be responsible for distributing your assets after your death. If you establish a trust, you will need to designate a trustee. Your appointed representative should be someone trustworthy, organized, and responsible. They should also be someone who understands and empathizes with your wishes.
Considering Creating a Trust
You may want to create a living trust instead of a will so that beneficiaries can avoid probate. A trust can also be beneficial if you are unable to handle financial duties or if you want to provide certain protections for beneficiaries after your death. There are a variety of scenarios that may make a trust the best option for you and your family.
Seeking Professional Help
While you may be able to write your estate plan yourself, it is usually best to hire an attorney to provide you with personal attention. An experienced attorney in this field can draft a plan for you that takes into account your assets, family, future long-term care needs, and potential estate or inheritance taxes.
Qualified estate planning attorneys typically have the ability to answer any questions you may have about preparing your plan and ensuring that you protect the interests of your beneficiaries.
Considering Estate Taxes
If you are fortunate enough to have a sizable estate, you’ll need to take estate taxes into account. To determine whether estate tax is due, it’s important to know that assets passed to beneficiaries outside of legal probate procedures can be included in the total value of your estate when calculating estate tax.
Choosing a Financial Advisor
You may need to consult a financial advisor for guidance on how to manage your estate and achieve your financial goals. A financial advisor can help you identify the right strategies to achieve your goals and provide financial protection for the future.
Signing the Documents
Once you have reviewed your assets and worked with an attorney to draft the necessary documents, be prepared to sign your documents. It is crucial to work with an attorney while preparing the necessary paperwork as they will be familiar with all the rules you need to follow. If your documents are not executed properly, they may be invalidated, which could result in your wishes not being carried out.
Reviewing Your Estate Plan
Don’t hesitate after signing your will and designating beneficiaries. Even after having a financial plan in place, it is important to review it periodically to ensure it remains current. Review your plan every five years and after all major life events, such as marriage, divorce, the birth of a child, the death of a beneficiary or heir, or a significant change in financial or health status for you or any beneficiary or heir.
When
Review your plan, check your asset list, and ensure that those assets are still present. Verify if you are still satisfied with your beneficiary designations. If you have made lifetime gifts of any of the assets listed in your will, remove them from your will to avoid confusion.
Frequently Asked Questions
How much does an estate plan cost? The cost of preparing an estate plan by an attorney depends on the amount of work required and where you live. However, there may be a legal organization near you that offers estate planning services at lower prices.
Why do I need an estate plan? You need an estate plan to help your beneficiaries avoid probate, reduce estate taxes, and ensure your assets are handled the way you want. To control how your assets are distributed, and even how they can be used, you need to have a properly established estate plan. It also helps ensure that future financial and medical decisions will be made by the chosen representative according to your wishes.
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Source: https://www.thebalancemoney.com/creating-good-estate-plan-3505162
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