Thinking about the end of life isn’t easy, which may explain why 60% of American adults don’t have a will or living trust prepared.
If you’ve been procrastinating on preparing the documents that outline your end of life wishes and create a safety net for your loved ones, now’s the time to take action.
What is Estate Planning?
Estate planning involves creating documents and accounts meant to manage your assets and best interests in the event of your incapacitation or death. It sounds morbid but it’s one of the smartest moves you can make.
An estate plan establishes these critical protocols:
- Your final will, with all of your wishes specified
- The executor of your estate who will oversee the terms of your will
- A guardian for any living dependents
- The beneficiaries listed on life insurance, investment funds, and other financial accounts
- The person who will act as power of attorney to make health care or financial decisions if you’re unable
- The establishment of trusts to limit estate taxes
Imagine reaching the end of your life before you have these matters established. You run the risk of your loved ones not having access to investment accounts, insurance policies, and assets that you intended for them. Estate planning makes it possible to maintain control over your life’s accomplishments and protect your family, even after you’re gone.
Writing a Will
A will is a legal document that provides specific instructions after your passing. These instructions may include custody of minor children, distribution of assets, debt settlement, and other important matters.
This may sound overwhelming, but it’s surprisingly simple to create a basic will. You can use an online form or work with an estate planning attorney to outline your final wishes and name an executor or trustee to fulfill your stated intentions.
Of everything in your estate plan, your will is the most important because it is authenticated through a legal process called probate. The custodian of your will must take it into the probate court to be validated and accepted as true, which then gives your chosen executor the legal power to enact your last wishes.
If you don’t have a will or it isn’t valid, the probate court will take control of your assets instead. This can make it much harder, even impossible, for your family to receive the assets and financial benefits you intended.
Other Parts of Your Estate Plan
After completing your will, turn your attention to other factors of your estate plan:
- Consider creating a living trust to hold your property and help your survivors side-step the expressive and time-consuming probate process
- Establish your health care wishes and select a power of attorney for health care
- Establish a power of attorney for your finances and make sure this person will respect your wishes and best interests
- Name an adult to manage the money and property that your minor children will inherit from you
- If you don’t have life insurance, purchase a policy to help your family afford funeral expenses and replace your income
It’s best to work with an estate planning expert to ensure you address all estate planning concerns properly and legally. You can protect your loved ones and assets in case anything happens.
Read about micro-investing and how to get started with our complete guide: Micro-Investing: What It Is, Why It’s for You and How to Start.