Avoiding estate planning because it forces us to consider our ultimate fate, overlooks the fact that having no plan leaves us unprotected in the event of incapacity. It also leaves our loved ones with taxes and legal costs that could be easily be avoided.
If you need another reason to address estate planning now, pop icon Prince should serve as a good example. Dying unexpectedly early at age 57, Prince left behind an estate valued at approximately $300 million. With no will, no spouse, no children and five half-siblings squabbling over his fortune, about half of his estate will be consumed by federal and estate taxes.
Whatever the final result, as discussed in investors.com, “5 Must-Do Tips For Your Will And Estate Planning,” you can bet it won't be what Prince wanted.
To be certain that at your death your estate isn't dragged through the courts and eviscerated by taxes, and all of your related decisions are executed in the way that you want, remember the following steps:
Inventory. Take inventory of your assets and liabilities to calculate your net worth and what’s in your estate. Before you visit an estate planning attorney, take some time to create this inventory to make sure that the meeting is worthwhile and to discuss the issues more thoroughly.
Beneficiaries. Select your beneficiaries and decide how you want your assets to be distributed. If you have children, you might consider a trust until the time when they receive their inheritance. For example, they could receive a portion at age 18, more at age 25 and the rest when they turn 30. You should also be sure to update your beneficiaries on retirement accounts and life insurance policies.
Your plan manager. Who’s going to quarterback your plan? It is important to designate an individual to have power of attorney to handle financial matters, if you become incapacitated and an advance health care directive, so someone you trust can make medical decisions on your behalf. A living will details the types of medical decisions you would prefer, such as an order not to resuscitate (DNR).
What’s in the plan? Talk with an experienced estate planning attorney and determine what type of plan is best for your situation.
Every state has different laws regarding inheritance. Therefore, you’ll want to sit down with an estate planning attorney who will understand that laws of your state and your own situation. Whether or not you have a spouse, children or live with a partner, all of these factors go into creating a personalized estate plan that works for you. No matter how unpleasant it is to contemplate you own mortality, this is an important task and should be done sooner rather than later.
Reference: investors.com (February 24, 2017) “5 Must-Do Tips For Your Will And Estate Planning”