Post-youYes, nobody relishes thinking about the day when they will no longer be around. But with a little effort and foresight, you can give your family the ultimate gift: a piece of mind. Here's a quick checklist of estate planning essentials:
WillsThese legal documents spell out clearly how you'd like to distribute your estate, the total wealth of a person less debts and other liabilities, after you shuffle off this mortal coil. You can also appoint a legal guardian for any minor children left behind. Without a proper and updated will, you run the risk of having your assets divvied up by the probate court in your state. This is known as dying intestate and the settlement process can be long and expensive. Consider this: When rock legend Jimi Hendrix died in 1970, the battle over his estate raged on for more than 30 years.
Living TrustsSome people prefer setting up a living trust, a legal document that places your assets (your bank accounts, investment portfolio, your home and so on) into the trust that is administered during your lifetime. You can name yourself the trustee or appoint someone else should you become incapacitated. When you die, the benefits are transferred to your beneficiaries.
Why bother? A living trust is harder to challenge should someone unexpected make a claim on your wealth.Also, a living trust, unlike a will, is not a public record. So your privacy is protected. Your wealth will be divided up in private with no interference from the state.
Living WillsWhat if you become seriously ill and can't make decisions for yourself at the end of your life? That's where a living will comes in. Having a clear health care declaration and power of attorney in place will make sure your medical care reflects your wishes.
Durable Power of AttorneyIt's also important to have a trusted legal authority or individual who can handle your finances and property if you become disabled and can't handle your own affairs. That's not going to happen unless you take the time out to do the legal work.
Beneficiary formsIf you haven't already, make sure you have named beneficiaries for you bank and brokerage accounts and retirement plans. With the paperwork in place, you can usually make sure these funds are payable upon your demise and keep them out of the hands of a probate court.
Life InsuranceShould you own a home with a big mortgage and have young kids with years of educational expenses ahead of them, having adequate life insurance in place can make a huge difference. Don't forget: Your debts will fall to your heirs and an insurance payout can keep them financially sound after you are gone.
Estate TaxesIn the U.S., most estates won't owe federal estate taxes. In 2014, the individual exemption in 2014 was $5.34 million. If are fortunate enough to have assets exceeding that amount, consult with your attorney and financial advisers explore ways to to minimize the tax hit.
Crucial documentsMake sure your wife, loved ones and attorney know where to find the documents they need to execute your estate according to your wishes. Don't add to the anxiety and grief of your passing by requiring your family to go on a search and fetch mission for key documents. Regardless of your net worth, it's important to take some practical steps to make sure your estate passes on smoothly to the next generation. Remember, you will be missed. Why not also be remembered fondly as well for your financial acumen and sensible estate planning?
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DISCLAIMER: The information contained in this article is general in nature and not intended as specific advice. Neither Covestor Limited nor its representatives are engaged in rendering tax, accounting or legal advice. A qualified professional should be consulted regarding the effect of such considerations on the matters covered in this article.
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