You might already know how important it is to have an estate plan set up but be putting off the task for various reasons.
You might be confused about what is involved in setting up an estate plan, not know where to begin, think you cannot afford it or believe you do not own enough to justify having an estate plan.
Estate planning is for everyone. No matter what you own, an estate plan provides directions for your loved ones as to how you want your property distributed and your affairs taken care of after you pass away.
With an estate plan in place, you save your loved ones the stress of wondering what you wanted done.
Identify your assets and debts
The first step in the estate planning process is to make a list of all your assets and debts. This includes major items such as a home or real estate and personal property, such as cars or other personal property.
Assets also include bank accounts, investments and retirement accounts. Perform a thorough search and make sure to include everything.
Do the same for your debts. Include significant debts, such as mortgages, as well as minor debts, such as a credit card with a small balance.
Obtain the most accurate value for your assets and the outstanding balances for your debts. When these steps are complete, you should have something that resembles a balance sheet.
The idea behind this is not to determine your net worth, but to have a list of everything that needs addressed in your estate plan.
Determine what estate planning documents you need
A will is one of the most basic estate planning documents, and that might be all you need for your entire estate plan. Other common estate planning items include trusts or powers of attorney.
A power of attorney is a document where you legally assign someone the responsibility of making medical and/or financial decisions for you if you become incapacitated and unable to make them on your own.
If you decide to set up a power of attorney, think carefully about who you want to make decisions for you. It should not only be someone that you trust, but someone that you expect to still be around in the future.
For example, you may want to appoint one of your parents to serve as your power of attorney. However, children usually outlive their parents, so remember that your parents might not be around when you get older.
Know the legal requirements
Once you decide what estate planning documents you need, a professional can draft them for you. It is important to understand the requirements involved for each document.
Wills in Maryland must be in writing and signed by you and 2 adult witnesses. There are also requirements for a power of attorney or other estate planning documents and if they are not met, the documents could be declared legally invalid.
If you have any insurance policies, review the terms and designate beneficiaries. Assign backup beneficiaries, if possible, to avoid a situation where your primary beneficiary passes away before you do and you forget to update your beneficiary information.
Taking these steps will take time and effort, but the results will be worth it. You will have the security of knowing your loved ones will be taken care of after you are gone.