Putting together an estate plan can seem like a hassle. Maybe you have been planning to do it for a long time but just haven’t gotten around to it like 47% of Americans. It is also plausible that you believe that you do not need an estate plan because you do not think you have enough valuable stuff like 29% of Americans.
The truth is that it is better to have an estate plan regardless of how much you own because it will help your loved ones sort everything out once you have passed on.
Will
Including a will in your estate plan is crucial. It is a key piece to your estate plan that explains how you would like your belongings distributed. The language that you use in your will is extremely important because it typically names who is in charge of the distribution, who will receive each asset and your funeral provisions. You can change or update this part of your estate plan as your life changes.
If you decide not to have a will, a court will put someone in charge of your estate to distribute your assets for you. Having a will assures that you will be able to control the division of your property.
Guardianship
Determining guardianship is extremely important if you have young children. This piece of your estate plan commonly appears in your will, but there are occasions when it is a separate element. Here you will decide who will be the guardian of your children in the event that you pass away.
Your goal should be to find someone, possibly a friend or family member, who is both willing and interested in becoming the guardian of your children. You want to choose someone who is in a good place financially and able to raise your children.
If you do not appoint a guardian, the court will decide a person who you may have not otherwise chosen for the role.
Power of attorney
Power of attorney gives someone the ability to act on your behalf in the event that you are no longer able to. This is an important piece of your estate plan because this person will have the power to make key decisions about your assets. It may be difficult to give up power, but it is important to take care of this element early because only a competent person can assign power of attorney.
In the event that you become mentally incapacitated or pass away without assigning power of attorney, the court will decide what happens to your assets. Naturally, these decisions may not align with your wishes.
Beneficiary designations
Beneficiary designations are crucial for people who have bought life insurance or have accumulated a substantial amount of money in a retirement plan. It is important to make sure the designations on these accounts are in order because they are extremely powerful. Your will cannot override who you appointed as the beneficiary of these accounts. As with everything else on this list, keep these documents updated as your life changes.
It may sound like a lot of work but putting together a basic estate plan can make truly make everything much simpler.
