Use these estate planning tips to make sure your assets go where you want them to once you pass on.
When 57-year-old singer Prince died in 2016, he left 120 guitars, 2,000 pairs of shoes, an immense wardrobe, and millions in assets and future music royalties. One thing he did not leave behind was a will, leaving a judge to sort out which of his siblings and half-siblings are entitled to a piece of music history and money.
Estate planning tips aren't usually high on the bedtime reading list, but the fact remains that arguments over an inheritance can tear a family apart. It's hard enough to lose a loved one without the additional tragedy of bitter fighting with family members. That's precisely why estate planning is so important; it's a final gift you can give to those you love.
What is Your Estate?
Quite simply, your estate is everything you own. Your car, your home, your souvenir plate from Disney - that is all part of your estate. Planning for the future of your estate upon your death makes it easier for your loved ones to put your affairs in order.
Estate Planning Tips
1. Don't wait
We don't know when our time on this earth will come to an end. Start planning right away so if something unexpected happens, your family and loved ones will be taken care of. Your first step is to write down the details.
2. Write a will
You can write your own will, but it may be worth the expense to hire a lawyer to help you. A simple will may only cost a few hundred dollars, while more complex estate planning documents will increase the price accordingly. If you need time to decide what's best, start with a simple "do-it-yourself" will, because anything is better than nothing.
3. Choose an executor
The executor of your estate is responsible for carrying out the wishes specified in your will, as well as taking care of ongoing bills (such as a mortgage), notifying banks and credit card companies, paying any taxes, and tying up loose ends. In most cases, the executor is a close family member.
4. Buy life insurance
Life insurance is one of the most secure ways to ensure the financial future of your loved ones. Life insurance can help them cover the expenses of your funeral and give them the gift of time to mourn without worrying about paying bills.
5. Remember that a will is also valid before you pass away
Estate planning tips usually focus on what happens after your death, but what happens before then could be equally important. Make sure that your estate planning gives someone the power of attorney to act on your behalf in financial and legal matters.
6. Preplan your funeral
Despite the fact that this may not be the most fun activity in your week, it could be a good way to make sure you get the send-off you want.
7. Put your assets into a trust
Consult with a lawyer to set up a trust, as there are far too many individual details to convey in an online article. However, the basic premise is that a revocable living trust lets you pass your property directly to your heir without worrying about the probate process. (Probate is the legal verification of your will, and can be lengthy in complicated situations.)
8. Review your estate plan regularly
Life changes necessitate a review of your will, retirement funds, and life insurance policies. Marriages, divorces, deaths, births, and real estate sales or purchases may all require an update to your will. Remember, for anything you don't specify, a judge will do for you, and that may not end up the way you or your family want.
9. Write it all down. Again.
Writing for Wealth Management, Martin M. Shenkman suggests writing an informal letter to your spouse, children, and any other beneficiaries describing your will. Also include important information such as the contact information for your lawyer, financial information regarding accounts or investments, and any other important professional contacts or information.
10. Talk about it
No, this isn't the dinner conversation everyone looks forward to, but it is a crucial conversation. Share your plan with family members so you can be sure you haven't overlooked anything or anyone. And remember, some parts of your estate may have a lot more sentimental value than monetary value. That's another good reason to talk about estate planning with your loved ones. You never know what they may consider valuable.
These estate planning tips are here to get you started, but because state laws (as well as individual circumstances) can vary greatly, it's ideal to consult with an estate planning lawyer.
Of course, one part of estate planning - life insurance - is something we specialize in. Contact your local Pekin agent today to find out what life insurance policy is right for you.