No matter what stage of your life you are in, there are a lot of very important reasons why you want to establish and settle your estate plan. With that being said, it can be quite hard to know what making an estate plan really means, let alone what it truly entails step-by-step.
For that reason, we have taken the responsibility to establish a comprehensive estate plan so that your property and equity can be passed on to those you love about and care about most in the event of your eventual passing. While it can be a hard thing to confront, it is important to make sure that everything you worked so hard for in your life goes to the people who deserve it most in your death. See more.
Let’s get started.
Make your will
In your will, you will state who you want to inherit your property as well as the name of a guardian to care for your children (if they are under the age of 18) if something should happen to you and your children’s other parents. This is crucially important because a will is legally binding.
This work not only protects your property, but also protects your family in the event of your passing.
Consider a living trust
The primary reason why you are going to want to consider a living trust is because holding your property in a living trust will make sure that your survivors will not have to go through the time-consuming and very expensive process of going through probate court.
Establish your health care directives
Writing out your health care directives is actually meant to protect you in the event that you become unable to make decisions for yourself. A health care directive includes a health care declaration and a power of attorney for health care. This gives you someone (often a trusted family member), who will make decisions on your behalf if you are not able to.
Establish financial power of attorney
Establishing a financial power of attorney gives you someone who you trust to have the authority to manage and handle your finances and property if you become incapacitated to do so yourself. The person who you choose to be your financial power of attorney is called your agent or attorney-in-fact, despite the fact that they are not required to be an attorney to be named your power of attorney.
With that being said, people do often task an attorney with this role.
Protect your children
Up next, you will want to make sure that the money and property that your children may inherit from you is legally protected. The best way to do this is to name an adult to manage that money and property until your children come of age. Quite often, this person is the very same person who you name to be the guardian of your children if you should pass before your children come of age.
File your beneficiary forms
Another very important step that you should stage as you are making your estate plan is to name a beneficiary for bank accounts and retirement plans. This makes the accounts automatically “payable on death” to your beneficiary. It also allows the funds to skip the aforementioned probate process. Moreover, in the vast majority of states in the United States, individuals can register your stocks, bonds or brokerage accounts to transfer to your beneficiary upon your passing.
Weigh the benefits of life insurance
This is especially important if you have young children or own a home or if you may have significant debts or an estate tax plan when you pass away. Life insurance may be a good idea. The reason why is because life insurance offers a large payable sum in the event of your death. It will give your family money that they need to get along if you pass and could help them pay off your debts as well.
Understand estate taxes
The vast majority of estates will not owe any federal estate taxes. In fact, the federal government of the United States only imposes an estate tax at an individual’s death if the taxable state is worth more than several million dollars. On top of that, married couples are allowed to transfer over $10 million tax-free. Finally, all assets left to a spouse or tax-exempt charity are exempt from taxes.
Cover your funeral expenses
While some people opt for using a funeral prepayment plan, these plans can often be quite unreliable. Instead, it is advised that individuals set up a payable-on-death account at your bank so that you can deposit funds into it to pay for your funeral and other related expenses.
Make your final arrangements
You will also need to make your end-of-life wishes known when it comes to your organ and body donation as well as the disposition of your body, with burial or cremation obviously being the two more common forms of disposal.
Make sure your business is protected
If you are the sole owner of a business, you will have to make sure that you have a legal succession plan. On the other hand, if you own a business with other owners, you should make sure to establish a buyout agreement so that there is no in-fighting in the event of your passing.
Store your documents
The attorney-in-fact and/or executor of your will should be able to have access to secured and protected documents, such as:
- Your will
- Your trusts
- Your real estate deeds
- Your information on bank accounts, mutual funds and safe deposit boxes
- Your insurance policies
- Your certificates for stocks, bonds and annuities
- Your information on debts, credit cards, loans, utilities and any unpaid taxes
- Your information on retirement plans, 401(K) accounts or IRAs
- Your information on funeral prepayment and any other funeral arrangements you have made
Get the help you need
If you are still unsure of how to approach setting up your estate plan, consider looking into a reputable service that can help you organize all of the technical and complex moving parts. While young people often put off planning for unexpected events because they are young or because it is expensive, it can be really easy to overlook the vital importance of each peace that goes into a will.
MyCare Plan is a comprehensive planning package, customized to fit your needs and cover each of the essential parts that make up a full comprehensive estate plan.