Doing Estate Planning? Follow These 4 Steps
Sep 26, 2023
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Did you know that 63% of people -- around six in 10 -- making north of $80,000 annually say procrastination is the main reason they delay estate planning?
Meanwhile, one in five people earning south of $40,000 annually say they need more assets to justify estate planning. That’s a mistake since estate planning is about providing for loved ones -- including dependents -- and gaining the peace of mind the process affords.
Consider these four steps when the time comes to do estate planning. For best results, find a law firm focused on estate planning. You’ll be prepared to make good decisions during the process.
- Determine Estate Planning Objectives
Before you start planning, you need to know what your objectives are. Estate planning isn’t just about leaving money, real estate, and other holdings for family. It’s also about ensuring you’re cared for as you age and that someone can make decisions when you can’t.
So, while contemplating how you want your assets distributed to family, friends, and special causes after your passing, you’ll also want to consider how you want to be cared for as you age.
When considering estate planning objectives, don’t forget to do the following things:
- Pre-plan final services, whether that’s a funeral or a cremation
- Select your healthcare preferences
- Select the beneficiaries of your estate
- Name the guardians of any minor children
- Set up financial security for loved ones
- Leave money behind for particular causes or charities
After you’ve written down objectives, the next step is determining how best to accomplish them. That’s where sitting down with a lawyer can help. You’ll discover how to achieve your goals, what legal obstacles might present themselves, and how best to avoid or scale them.
- Tabulate Assets and Debt
The next step is to add up your assets and debt so that you can divvy up your estate.
You can start by creating a debt list. This list should include student loans, credit card balances, car loans, mortgages, lines of credit, and any other debt.
When creating an asset list, add anything of value you can think of. The list should include real estate, vehicles, collectibles, personal valuables, financial assets, and insurance policies.
Are there assets you want specific people to get after your passing? If so, note this in writing so that such assets aren’t liquidated to cover any debts after you die.
After creating a debt list and asset list, subtract your debts from the value of your assets. You can then distribute the amount left over to whomever you want in your will.
Talking with a lawyer about the tax implications of anything related to your estate plan makes sense. For instance, leaving real estate behind for someone should be done correctly so the recipient doesn’t have to deal with the lengthy and costly probate process.
"Probate can be time-consuming and expensive,” says Gideon Alper, a lawyer at Alper Law in Florida. “Using a ladybird deed lets the beneficiaries inherit the property without having to go through that process."
- Create Last Will and Testament
It’s vital to create a last will and testament. By so doing, you can stipulate how your assets will be allocated after you die. In a last will and testament, you can leave possessions to whomever you wish, appoint someone to care for your young children, and more.
While you’re thinking about a last will and testament, you should also consider who to name as the executor of your will. This person will ensure your wishes are carried out after your passing.
- Choose Power of Attorney
You also need to choose a power of attorney who gets the authority to manage your estate when you cannot do so. If you’re incapacitated, your power of attorney will decide on your behalf. Choose wisely since this person will have authority over your affairs.
Remember these four steps when doing estate planning. It’s an essential process that too many people ignore or delay. You’ll fare better if you work with a lawyer specializing in estate planning. You’ll see that estate planning doesn’t have to be painful when you get the right guidance. Getting it done will give you peace of mind now and your family peace of mind later.
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