I’m sure when you woke up this morning, death was not something that crossed your mind. To think about “the end” is not how most people start their days, but unfortunately, the actions that should take place after the inevitable is something that should be discussed and carefully planned out.
Stop for a moment and think to yourself who would bear the burden if you were to die today. Are there certain responsibilities that your loved ones would suddenly have to take over? There are numerous questions that arise when you start to think about the “what ifs” that come with life...and death.
An estate plan is created to help prepare for the transfer of your wealth and assets after you are gone. A common misconception is that you have to be old or wealthy to have an estate plan, but nothing can be further from the truth. There are many parts to one’s estate, including assets, life insurance, real estate, cars, personal belongings, and debts.
Here is a list of some must-do’s to get your estate planning up and running
1. Create a will.
An unbelievable 92% of adults under the age of 35 DO NOT have a will. (Tweet this stat!) While a will creation is not something that is usually top-of-mind for most young adults, it is not something that should be put off. There are numerous ways to go about drafting a will, including researching online resources. The guidance of an estate planner can help answer any questions that you may have and may even bring up questions that you may not even know to ask. Having a living will in place can relieve some of the stresses that many heirs burden themselves with after a loved one passes—plans, expenses, and asset allocations.
2. Ensure that all related documents are completed.
Everyone has different estate planning needs. Your unique needs will determine what type of supportive paperwork you may need to go along with your will. For some, it's a specific type of trust, multiple trusts, or financial and medical power of attorney documents. Estate planning professionals can help recommend what documents are necessary for your specific plan.
3. Review your beneficiary designations.
Do you know who you have named as your beneficiary on your life insurance policy or for any other policies that you may have in place? Since this is not something that most remember to check on a routine basis, it is a good idea to update/revise beneficiary information while you are planning for the future of your estate.
Beneficiary information is extremely important because it takes priority over your will when it comes to certain items. For example, if you have a life insurance policy that has your now-estranged spouse named as the beneficiary, he/she will be the one to receive your death benefit when you pass away, even if your will says otherwise. That is why many estate planners will recommend that you review your beneficiaries every two years. Although it is easy to forget about, you must remember that updating and revising your beneficiaries now can save your heirs the headaches down the road when you are no longer around to provide your input.
4. Provide your executor with an up-to-date list of all of your information.
The executor of your estate is more than likely someone that you know extremely well and trust. This person should have copies of all the important documents you have in place, including your will, life insurance paperwork, forms, and trust information.
It is also a good idea to provide them with a current list of assets and debt. This ensures they have detailed information regarding your wealth, including real estate you own, personal property items, bank accounts, retirement accounts, investments, credit card debt, mortgage loans, and any other outstanding loans.
5. Talk to the professionals.
Estate planning is not something to be taken lightly. It is a necessary action that should be carefully planned so that your heirs are not left with the additional burden of combing through excessive paperwork. It is easy to start some of these recommended items on your own, but it is important that you also talk to a professional.
Estate planning can sometimes be a complex exercise and can trigger a range of different issues, including legal, financial, and emotional obstacles among your loved ones. Often times, people have the misconception that speaking with an attorney about estate issues can come with an exorbitant price tag, but before you completely rule that option out, check your benefits through work, union, or local associations. Some employers include access to attorneys for will creations.
It is important to remember that estate planning is not just about money. Millionaires are not the only ones who need to have a plan in place; everyone should have an estate plan created. With a little time and some guidance, you'll be on your way to an estate plan that can leave you with one less thing to worry about.
Find out how much you could owe in estate taxes by accessing our federal estate taxes calculator.