Despite how important it is, 62% of Americans don’t have a will. This leaves their estate to go through probate. This can result in a distribution of assets that may not coincide with your wishes.
It’s also a long and drawn-out process that requires the court system’s intervention. The simple and easy alternative is to prepare an estate plan.
This guide explains estate planning basics so you can understand how to get started with your own plan.
What Is Estate Planning?
Throughout life, you will save money and purchase items. This collection of assets is your estate. When you die, the ownership of these assets needs to pass to someone living. Your creditors will also expect payment in full for any outstanding debts.
Estate planning gives you a voice in how your assets get distributed once your debts are satisfied. It can also address what should happen should you become incapacitated.
How to Create Your Estate Plan
Start by inventorying your belongings. This includes tangible assets like land, homes, and cars. It also includes intangible assets, such as bank accounts, stocks, and insurance policies.
Determine which assets have an automatic transfer of ownership built-in. For example, insurance policies and 401(k) accounts have a dedicated beneficiary.
Take stock of your family’s current situation. You may need to make a plan for the care and guardianship of your children. Married couples often plan for their loved ones’ care and future, such as arranging for mortgage payments to continue.
Establish Your Wishes
Decide what medical procedures and care are acceptable to you. This is important should you become incapacitated and unable to advocate for yourself.
Name a trusted individual to hold financial or limited power of attorney. This gives someone the legal power to make decisions for you when you’re unable to.
Name Your Beneficiaries
Create a will that outlines how you want your assets distributed. Name a beneficiary and contingent beneficiary for each asset. Anything not accounted for will go through probate, slowing down the process.
Hire a Lawyer
The law is a complicated and continually evolving entity. While you could use pre-made generic forms online, there’s a risk with this. They may not be the most updated, making them non-compliant with the current law.
They also may not be the best course of action for your estate. When you hire an estate planning lawyer they can create a customized estate plan and work through an estate planning checklist to ensure every aspect of your estate gets taken care of.
Follow These Estate Planning Basics
By following these estate planning basics, you can prepare for the unexpected. While no one wants to think about their death, it’s a necessary task to ensure your estate and assets are handled in a matter that’s acceptable to you. The best course of action is to speak with an experienced attorney who can guide you through the process.
Check out our other articles discussing various legal topics to understand your rights and the legal system better.