Why You Need an Estate Plan
Did you think you had to be rich to have an estate? Think again! From a legal perspective, your estate includes everything you own, from tangible property like a car, house, furniture, as well as intangible assets like insurance policies, bank accounts, retirement and investment accounts. You don’t have to be rich to have an estate, says the recent article “How to Plan Your Estate” from The Military Wallet. However, you do need to have an estate plan, and the best time to start planning is right now.
An estate plan is more than simply passing your property along to heirs. It is also how you prepare for the unpleasantries of life, including becoming incapacitated or being unable to make decisions on your own.
Your estate plan protects you and your beneficiaries. Without a will, the court will determine who will get your assets subject to probate, following the laws of your state. With a will, you determine who should receive your probated property, from family members to charities.
Your estate plan protects your children. Your will nominates a guardian who will care for your children if you die before they turn age 18, or, if you have a disabled child with special needs, who will care for them for the rest of their life. Without a will nominating a guardian, the court will make these decisions.
Your estate plan protects your family by preventing conflict. Your wishes are made clear in a will and in other estate planning documents. The more details, the better. No one can say they knew what you really wanted, because what you really wanted is documented and memorialized in your estate plan.
Getting ready to meet with an estate planning attorney will be easier if you take it step by step.
Make an inventory of all assets, including
- House, land and any real estate property
- Cars, boats and any other vehicles
- Bank, investment and retirement accounts
- Life insurance policies
- Health savings accounts
- Jewelry, valuables and collectibles
- Digital assets, including website URL, username and password
- Cryptocurrency, including all information for an executor to be able to access accounts
Create a plan for the different scenarios in your life. Who would you want to raise your children if you and your spouse die while children are minors or are unable to care for them because of illness or injury? How will your spouse pay the mortgage if you die unexpectedly?
Make a list of all accounts with designated beneficiaries. This typically includes life insurance, retirement plans and annuities. Any time you have a major life event like marriage, divorce, birth or death, these designations should be reviewed.
You’re now ready to meet with an estate planning attorney. Your estate plan should include a last will and testament, outlining who should receive your property, who will distribute your estate (your executor) and who should raise your children if you die while they are under legal age.
A Health Care Proxy is used to name a person who can make decisions about your healthcare if you cannot. A Living Will outlines the details for medical treatment you want or don’t want when you are near death.
Power of Attorney is a document giving someone else the power to take care of your finances at any point, if you can’t because of illness or incapacity. This avoids your family members having to go to court to obtain a guardianship, which takes time and is a costly proceeding.
Reference: The Military Wallet (Aug. 25, 2022) “How to Plan Your Estate”