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Many of us do not like to think about
estate planning because the process
reminds us that we are not going to live
forever. Yet if you want something of
yourself to live on, you should have a
comprehensive estate plan. And the best
time to start your estate planning is
many years before it will likely be
needed.
A good estate plan can help
you answer many key questions: Who will
make financial decisions for me if I
become incapacitated? Who will take care
of my children if I die prematurely? How
will my money and property be
distributed? How can I avoid probate?
Can I reduce, or eliminate, the estate
taxes my heirs may face?
To address these and other
concerns, you will need to work with
your tax and legal professionals to
create an estate plan that is
appropriate for your needs. You will
also need to work with a financial
professional to select any investments
that may be needed within your estate
plan. While working with these people,
you may need to consider the following:
Ownership titles.
When it's time for your estate to be
settled, the ownership of all your
assets – real estate, securities,
retirement accounts, etc. – will be an
important issue. Your tax and legal
advisors can help you determine which
forms of property ownership – joint
tenancy, sole ownership and tenants in
common – are suitable for your needs.
Beneficiary designations.
It is obviously important to name
beneficiaries on life insurance
policies, annuities and other financial
vehicles. But many people neglect to
review their beneficiary designations
periodically, and that is a big mistake.
If you get divorced and remarried, or if
you have a new child, you will want to
change or add beneficiaries. If you
forget, your family could go through
some major headaches when it is time to
settle your estate.
Will. If you do not
have a will, your wishes may never be
fully honored, because state law will
dictate how your assets are divided. And
if you have no living relatives, and you
die intestate (without a will), your
estate will go to the state.
Living Trust - If you
only have a will, your assets may have
to pass through probate, which can be
time-consuming and expensive. But with a
properly established living trust,
drafted by an experienced attorney, your
assets can pass directly to your
beneficiaries, without court
interference, legal fees, lengthy delays
and public disclosure. Also, a living
trust can give you more precise control
over how and when you want your assets
distributed.
Durable General Power of
Attorney. When you create a durable
general power of attorney, you can
appoint another person to conduct your
business affairs if you are physical or
mentally unable to manage them yourself.
Health Care
Directive/Living Will. By
establishing a health care directive or
living will, you are providing evidence
of your wishes regarding the
administration of life-prolonging
procedures when you are no longer able
to communicate.
Proper planning takes time.
It can take months, or even years, to
get your estate plans in the shape you
want, and you will still probably need
to make changes as you progress through
life. Get started on your estate
planning soon. It can be a lot of work
but it is worth the effort. |
