(StatePoint) Many people may avoid estate planning because they think it can be put off until later in life. But experts agree that adults of any age should have a plan in place to make sure their financial affairs are in order after they pass on, or in case they are incapacitated. A complete and thoughtful estate plan covers more than who will get what — it helps to ease the burden on your family and beneficiaries by documenting your wishes and instructions.
Here are the four major steps involved in developing an estate plan:
• Inventory and Determine Asset Value: Account for any and all items you can make decisions about — including financial assets, real estate and even intangible property such as patents or copyrights. Then, determine the financial value of each asset. Debt should also be considered.
• Choose Your Beneficiaries and Decision Makers: These designations are crucial to estate planning. Beneficiaries — the recipients of your funds, trusts or property — are typically a spouse, child, relative or friend. They can be decision makers, too. Choose someone responsible who can be charged with administering the assets of your estate, taking care of any remaining financial obligations, and ensuring your wishes are carried out.
• Consider Setting Up a Revocable Trust:Revocable trusts give you an added layer of control and privacy over your assets that is not possible when assets are left directly to beneficiaries. They let you continue managing your property and make changes to the trust terms during your lifetime, and they allow property to pass to your beneficiaries without a court proceeding.
• Write a Will and End-of-Life Documents: Your will governs who will receive property not otherwise designated by titling, the terms of a trust, or by beneficiary designation (such as on retirement accounts or insurance policies). Other end-of-life documents might include a living will dictating what should or should not be done to keep you alive, or a simple letter regarding how you would like to be laid to rest. Keep all of your finalized, original estate planning documents in one location so they don’t get lost and make several copies to store in a different location, such as a safe deposit box.
Remember that keeping your estate plan up to date is necessary to preserve your future wishes and prevent your loved ones from experiencing unnecessary stress. Experts recommend that you review your estate plan annually or biannually to ensure it is current, and update it as major life events occur, such as marriage, divorce or the birth of a child.
You may want to consult a Certified Financial Planner professional to bring the different parts of your estate together into a plan that represents your wishes. To find a CFP professional near you, visit letsmakeaplan.org.
Estate planning may not be fun, but designing a plan now will help provide the best outcome for your family and friends when you are no longer with them.
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