Estate Planning: How to Make Sure Your Finances Are in Order

Tuesday, May 5, 2020, 6:00 AM | Leave Comment

A proper estate plan will effectively detail who will receive your assets and be in charge of legal and financial obligations have you have passed or put in a position where you are unable to make these decisions.

Here are six things that you need to know before you begin your personal estate planning process.

  1. Take an Inventory

    Before you start this laborious process, you need to take a full inventory of all of your assets. Tangible assets include items such as your home, other pieces of real estate, vehicles, valuable collectibles, and personal possessions.

    You also need to inventory all of your intangible assets. This category includes items such as retirement plans, investment accounts, checking and savings accounts, and life insurance policies. Once you have a clear idea of your worth, you can start the estate planning process in earnest.

  2. Consider Your Family

    Whether or not your children are adults or still minors is a significant factor in how you design your estate. The first thing to do if your children are still in the house is to designate a guardian for them.

    Do not presume that your preferred family members will assume guardianship. This needs to be legally laid out to avoid controversy. You also need to ensure that you have sufficient life insurance funds to cover the needs of your children or additional surviving family members that rely on your income.

  3. Finalize Your Beneficiaries

    If you are like most people, it may have been decades since you set up your various retirement accounts and insurance policies. There is a good chance that your beneficiaries have changed since the time that you originally set up your accounts.

    For this reason, it is important to review your beneficiaries on every relevant account before you finalize your estate. You should also verify that every account has a contingent beneficiary named as a backup.

  4. Understand the Laws

    The legalities of estate planning can be tricky if you are not a professional in this area. Not only do you need to consider the various federal laws, but you also need to understand the state laws specific to where you live. Some states also have inheritance taxes that need to be considered.

    An estate planning attorney can help you to understand all of these details so that nothing falls through the cracks. A trained professional can ensure that your money ends up in the right hands while maximizing the value of your estate.

  5. Put Your Directives in Place

    Estate planning goes far beyond the financial implications. You also need to layout your medical directives in the event that you become incapacitated and cannot make your own decisions about your medical care.

    Issues to include in this directive include the types of medical treatment you do or do not want, where you would like to receive your health care, your wishes for organ donation, and who you want to be in charge of making these difficult decisions. Along with this designation, make sure that you have established a financial power of attorney.

    Be sure to consider these selections carefully. Lastly, it is a good idea to include your wishes for your funeral in these documents so that your loved ones do not have to make these decisions hastily.

  6. Revisit Your Plan Often

    Once you have everything in place, you cannot simply ignore it and move on. It is a good idea to revisit your estate plan at least once a year to make sure that everything is still how you want it. This is especially important if you have experienced any major life changes such as a divorce, a new marriage, the birth of a child, or the loss of a loved one.

    Even if your personal situation has not changed, it is important to review your plan regularly to account for any changes in the laws.

While it may be tedious and challenging to go through all of these steps, it is imperative that you take these necessary steps to protect your estate. You will sleep better at night knowing that you have done everything that you can to protect your family after you are no longer here.

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