Estate Planning: What It Is and Why It’s Important
Personal possessions, car, home, savings, investments, and other assets owned by an individual at death are called an estate. When a person dies, his estate will be given to his heirs. However, this person needs to provide instructions to be carried out especially on how his assets are distributed to his heirs. This process is called estate planning.
Estate planning becomes even more crucial, especially during these times. Although there is already a vaccine available for COVID-19, it’s still essential to carefully plan your estate.
In this article, we’ll discuss what you need to do to get started.
Why It’s Important to Plan Your Estate
While it’s not exciting to plan your estate, this is something that you need to do. When you don’t do estate planning, you can’t choose who gets to have your investments, savings and other valuables.
Your estate plan protects all your beneficiaries. Remember that unless you decide who gets to inherit your assets, no one (except the court) will have control over your valuables. It will help if you designate heirs for all of your assets. Otherwise, the court will decide, and this could take years and may even cost more.
Creating an estate plan also ensures that your heirs won’t have problems with taxes. Working with a good company can help you reduce state inheritance taxes.
Also, you eliminate family feuds when you have an estate plan in place. There were cases where siblings argue because one of them think that they deserve to inherit more assets. Some of them even end up in court, and it could get really ugly. You can avoid all these when you carefully plan your estate.
Estate Planning Steps
1. Create an Inventory of Your Assets and Liabilities
Compile a list of everything you own: cash, jewelry, real properties, cars, investments, retirement accounts, savings. Keep this list in a secure location, along with all the documents needed. Also, include the contact numbers of your financial advisors. You can also make a digital copy, just in case.
To start with your list, go through items in your home and list all the valuable ones, including antiques, lawn equipment, power tools and collectibles. Follow with non-physical assets such as your IRAs, bank accounts, or 401(k) plans. If you belong to organizations like a veterans association or other memberships, include this too.
For your liabilities, list all of your debts and other obligations. This should include mortgages, HELOCs, auto loans, personal loans, credit cards and other financial obligations.
After creating the inventory, ensure that you sign them and make at least three copies.
2. Make a Contingency Plan
The next step is to determine the best estate plan that you need. You may need the help of a professional for this. An accounting firm or an attorney can help you.
Your estate plan lets you control what happens to your assets should you pass away. When you suddenly become incapacitated, your family won’t have to go to court to know who gets to have your properties or who becomes the guardian of your children.
3. Choose the Would-Be Guardian of Your Children
When you don’t plan your estate, the court decides who will be the guardian of your children when you die. You can choose a guardian that you prefer when you do estate planning. Should you become disabled, you can also name a person you would like to take care of your financial decisions.
4. Name Beneficiaries
Life insurance policies already have beneficiaries in them but keep in mind that you can also change this if you want to. For your other assets, ensure that you note the beneficiaries in your Trust or Will.
Your goal should be to provide for your partner, children and other dependents. Include provisions for your children, including those from a previous marriage. Consider addressing income and care of children with special needs and make sure they’re planned carefully.
5. Look for a Trusted Company
Keep in mind that estate planning isn’t just a one-time event. It’s an ongoing process, so ensure that you work with a reliable company for this. We have been helping families with estate planning for almost 40 years and still counting. Don’t hesitate to get in touch with us so we can assist.
6. Finalize, Sign and Notarize Your Estate Plan
Keep in mind that you need to protect all of your assets and minimize expenses when estate planning. Ensure that you include strategies on how to dispose of unique assets. Don’t forget to go through them and finalize them before signing. Notarize your estate plan when it’s finalized.
7. Update as Needed
When everything is finalized and notarized, ensure they’re kept securely. Put your wills and trusts in a fireproof safe is possible, and your family should be able to find it easily.
There is also no rule that estate planning should be done just once; You can always update it as needed. However, make sure that they’re signed and notarized. Otherwise, it won’t be valid.
When is the Best Time to Plan Your Estate?
No one wants to think about dying or the possibility of being unable to make decisions. This is why we would always recommend that you do estate planning today because we don’t know when death would strike. You can protect your loved ones when you start planning your estate.
Contact Clifford, Ross, Raudenbush & Cooper, CPA, LLC
Don’t hesitate to get in touch with us if you need assistance with estate planning. We pride ourselves in our commitment to provide only the best estate planning services to our clients. We can help with all aspects involve in estate planning including the power of attorney, wills and trusts.
Contact us today for an appointment.