If you are like many of us, you still haven’t achieved all of your 2022 New Year’s Resolutions. Fortunately we have started a new year and you get to forget your old resolutions and start with a clean slate. And one of the most important things you can do to protect and provide for your family is to get your estate plan in order. This is one of those resolutions people make year after year and just keep putting it off – kind of like losing weight. But it is easier than losing weight because you can get someone else to do most of the work.
Five Steps to Getting Your Estate in Order
People put off estate planning because they believe that it’s tedious and expensive, and because they really really don’t want to believe they could die. The first two are wrong and the third — Well… . Things happen whether you plan for them or not. And while estate planning may not seem “cheap,” the cost is cheap in comparison to what it’ll cost your family if you die without good planning in place. So here’s how you get started:
1. Inventory Your Assets
List all your tangible and intangible assets. This includes real estate, vehicles, and collectibles as well as financial accounts, stocks, bonds, life insurance policies, retirement plans, and interests you may own in any business. Include an estimate of the value of each asset.
2. Consider Your Family’s Needs
Name guardians for any minor children, describe how you would want your children cared for and how you want the money you leave for them distributed (college, cars, home down payments), and ensure you have sufficient life insurance to cover the necessary expenses.
3. Draft Your Medical and Financial Powers of Attorney and an Advance Directive
Estate planning is not just about wills and trusts. You may become incapacitated at some point in your life as the result of an accident or, when you grow older, dementia. For these situations, you need a durable financial power of attorney and a medical power of attorney naming the people you want to make medical and financial decisions for you if you become unable to make them yourself. You want to choose someone you trust to carry out your wishes. An advance directive states whether you want hydration and nutrition as well as other treatments if you end up with a terminal condition that you are expected to die from within six months. Basically: Do you want them to withhold treatments except pain medications and let you die – or not.
4. Review Your Beneficiary Designations on Non-Probate Assets
Beneficiary designations on retirement and insurance accounts control if your will names a different beneficiary for those assets. So upon marriage, divorce or other major changes in your life, you need to review this information to make sure the money will still go to the right person. You don’t want an ex-spouse or adult children receiving this money when it may be needed to support minor children.
5. Hire an Attorney
Setting up an estate plan will protect both your loved ones and your legacy. Can you do it yourself? Maybe. But do you want to risk making a mess that your family will have to clean up later? If not, consult an attorney to make sure you will get the outcome you want.
