Contrary to popular thought, estate planning isn’t only for the rich. Anything you own counts as your estate, no matter how large or little you own. It’s imperative to take time and plan your estate to ensure the well-being of your beneficiaries should you pass on or become incapacitated.
Estate planning can be overly complicated if you don’t have the proper guidance through every step of the process. If you’re looking to make an estate plan but don’t know the first thing about doing so, you’re in the right hands.
To learn more about estate planning, keep reading more at this website and we’ll show you how you can plan your estate through our step-by-step guide.
What Is Estate Planning?
Real estate planning is the process of deciding who will receive your assets and handle certain responsibilities, should you die or become incapacitated.
It’s one way of ensuring your beneficiaries’ well-being and financial security when you pass on. It also ensures your survivors and heirs receive assets with the minimum estate tax, gift tax, and the likes.
An estate plan is a means to give you considerable control of your wealth distribution even when you’re not in the picture. It also ensures the growth and continuity of your assets.
Steps To Planning Your Estate the Right Way
It’s imperative to call a reputable estate planning attorney to guide you through the entire process and ensure everything is in line with the law. That said, you can create your estate plan by following these simple steps.
1. Create an Inventory of What You Own
The first step in estate planning is creating an inventory of everything you own. As mentioned above, you don’t need to have a lot to create an estate. Make an inventory of whatever you own, and it might surprise you how much wealth you have.
That said, make sure you include both tangible and intangible assets in your inventory. Tangible assets include stuff like:
- Real estate, including homes, land, and other properties
- Vehicles like cars, trucks, motorcycles, and the likes
- Collectibles like art, trading cards, and other valuable items
intangible items you should list on your inventory are things like:
- Certificate of deposits
- Saving and checking accounts
- Business ownership
- Mutual funds, trusts, and stocks
- Retirement plans and individual retirement savings
- Financial statements
When making your inventory make sure you’re as detailed as possible about your assets and debts. That means apart from account numbers, ensure you also include contact information and relevant names. It’s also a good idea to keep copies of the documents in question.
Once you’ve listed everything in your inventory, the next thing to do is estimate their value. If you don’t opt for an outside valuation, you can value the assets based on how much you think your heirs would value them.
2. Establish Your Survivors’ and Beneficiaries’ Needs
After compiling an inventory of what you own, the next step is to account for your survivor’s needs after you’re gone. Your beneficiaries can be anyone from your family to your close friends and even workmates. For the second step, you’ll have to:
- Declare your kids’ guardian. You’ll have to declare a guardian for your kids to take care of them after you pass on. This will save your survivors from lengthy court battles that could drain your assets.
- Ensure your life insurance is on lock. Life insurance depends on several factors, including marital status and lifestyle. Ensure your life insurance is okay, especially if you have kids that haven’t completed their education.
- Document how you wish your kids to be taken care of. Write down what you’d want for your children after your demise. Assuming that your friends and relatives have good intentions and take good care of them is not the best way to handle this situation.
3. Make a Will or Trust
A will contains all the details mentioned above. It will expressly state who you want to inherit your property and take care of your kids. If you’re not comfortable with a will, you can settle for trust instead.
What Is a Trust?
A trust is where you agree to give someone your assets, a trustee, to control or distribute them for the benefit of your beneficiaries.
Trusts are one way to protect your assets by entrusting them to someone you trust will take good care of your assets and beneficiaries.
Will Vs. Trust: Which One to Choose
Most people have a hard time choosing between a will and trust. While making a will is much easier, a trust guarantees the prudent use of your assets. A trust also allows you to sidestep the probate process and saves a ton of time and money.
The one you choose between the two depends on your unique needs and current situation. However, remember you can always opt for both if you can’t decide between the two.
4. Confirm Your Beneficiaries
After completing your will or trust or both, the next step is to review your beneficiaries. That way, your assets don’t fall into the wrong hands. To review your beneficiaries, you’ll need to:
- Check your accounts and policies for any beneficiaries you might have named years ago. For instance, check the beneficiaries you named in your life insurance policy and make sure everything checks out.
- Check your retirement account because your retirement account has a section where you’ll need to name your beneficiaries. Make sure the beneficiary in the account is someone you want.
- Review your contingent beneficiaries who act as backup beneficiaries in case the ones in your will or trust pass on or you forget to update your choice after their demise.
5. Seek Professional Help for a Final Review
Hiring an estate planning lawyer is something you should do from the onset.
If you haven’t, you should hire one when concluding your plan to ensure everything is A-okay. A lawyer will ensure that everything aligns with your state’s estate laws and follows due diligence.
Besides an attorney, consider hiring an accountant or any other tax expert to help you with taxation and evaluating your assets. This helps avoid future tax issues with your beneficiaries and make the right asset distribution decisions.
Plan Your Estate Today
Death doesn’t knock, and you can never know when your time comes. To be on the safe side, sit down with your lawyer and start estate planning as soon as you can. Plan your estate today to safeguard your survivor’s future interest.
