- Take inventory of what you have and determine its value . Any and all items that you can make decisions about should be accounted for. This includes financial assets, real property, intangible property such as a patent or copyright, even computer files and passwords. Then determine the financial value of each asset, as well as any debts you owe. Review how each asset is titled, and/or if there is a beneficiary designation associated with the asset. Be aware that any account or title that is in joint name or carries a beneficiary designation (i.e. retirement plan, life insurance policy, annuity or pension) already carries its own "transfer instructions" as to who will receive the asset after you. Anything else requires the more specific instructions contained in a will and/or trust document.
- Consider whom you would like your assets to go to, if not already decided by title or beneficiary designation. As importantly, determine if your beneficiaries or heirs are ready – by age or maturity – to receive such assets. Are they too young to own property or assets in their own names? Are they incapable of managing these assets responsibly? Is the asset illiquid (such as a residence with a mortgage, or an ownership share in a closely held-business)? Would the inheritor of the illiquid asset have a difficult time coming up with the additional funding that might be needed to hold such an asset? A "yes" response to any of these questions means that more elaborate strategies than a simple transfer may be warranted.
- Decide whom you do NOT wish your assets to go to. While the majority of people want to benefit a relative, there is virtually no one who wants this relative to be their Uncle Sam, or any of his extended family in the guise of state or local government. Furthermore, few married individuals are okay with the prospect of their assets going to the "next" wife or husband, should they die before their own spouses. And it's not likely that a bequestor wants his or her wealth to be consumed in paying off a family member's creditors. If any of these "yes, but" situations are applicable to your wishes about how your assets will be distributed, be sure to take note. These, too, will need to be addressed by more sophisticated estate planning.
- Use life and disability insurance to create an estate if you have nothing to bequest but have individuals dependent on your support. You will need to get life and disability insurance coverage to make sure your dependents will not be left without resources, should you die or become unable to earn a living. Preliminary to getting such coverage, assemble your medical records and information, along with all the data on your assets.
Leaving Your Legacy: Establishing A Plan To Care For Those You Leave Behind
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