Often, trust funds are referred to as something that is owned by a beneficiary. Some…
The Step-by-Step Guide to Planning Your Estate
The process of estate planning involves the creation of a number of documents that specify a person’s wishes. During the process, you can name people to make financial decisions on your behalf when you are unable. You can designate beneficiaries for your assets. You can also express your wishes for what type of medical care you want if you are severely ill or injured and unable to communicate.
Since each person’s situation is unique, every estate plan is different. Here are the basic steps in the estate planning process to get you started. Working with an estate planning attorney will help you create and implement a plan that works for your specific needs.
Inventory Your Assets
We often don’t realize how many tangible and intangible assets we have until we start counting them. Before meeting with an estate planning attorney, create an inventory of everything you own that has significant monetary or family value.
Your tangible assets may include:
- Real estate, both residential and commercial (unless owned by your company)
- Vehicles, such as cars, motorcycles, or boats
- Collectible items, such as artwork, antiques, coins, stamps, or trading cards
- Jewelry and other valuable items
Your intangible assets may include:
- Checking and savings accounts
- Investments, such as mutual funds, stocks, bonds, or certificates of deposit
- Retirement plans, such as a 401(k) or an IRA
- Life insurance policies or health savings accounts
- Ownership shares in a business
After you have created an inventory of your assets, determine each asset’s value. If you are unable to attach a dollar amount to an asset, you can determine its worth by how much your heirs will value it or have it appraised. By giving each asset a value, you will be able to evenly divide your assets among your heirs.
Determine Your Family’s Needs
One important aspect of estate planning is making sure your dependents’ needs will be met after you’re gone. Life insurance can be a good way to ensure the necessary funds to support your loved ones. Work with a financial advisor to be certain you have enough life insurance to cover your dependents’ needs.
If you have minor children, name a guardian and a backup guardian who can take care of your children if you and your spouse are both unable to care for them. In addition to naming guardians for your children, it is a good idea to express what’s most important to you. For example, you can share your values related to education, religion, and general child-rearing.
Put It All in Writing
For your estate plan to be official, you need to put your desires into legal documents and sign them in the presence of a notary public and one or two witnesses. The requirements for a valid will vary from state to state. Here are some estate planning documents that may be part of your estate plan.
- Will: A will is an estate planning document that everyone should have. You can use your will to name the person you want to manage your estate after you have passed away. You can also designate which beneficiaries should get which assets, appoint guardians for your minor children, and explain funeral and burial arrangements.
- Trust: During the estate planning process, you may determine that you need a trust to manage some of your assets. Trusts are useful estate planning tools that can offer various asset protection benefits. An estate planning attorney can let you know if a trust can help you achieve your estate planning goals.
- Durable Financial Power of Attorney: This document allows you to appoint a person you trust to manage your financial affairs if you are unable to manage them.
- Advance Health Care Directive: With this document, you can express your wishes for end-of-life care and name a person you trust to make health care decisions on your behalf if you are unable to do so.
- HIPAA form: This form is usually only about three pages long and includes a list of people whom healthcare providers may share your medical information with.
Review and Update Your Estate Plan
Too many people think that once they have signed their estate plans, they are through with the process. However, since changes in our lives are inevitable, changes to our estate plans are often necessary. You should review your estate plan every few years and consult with your estate planning attorney when you need to make changes.
This article offers a summary of aspects of estate planning law. It is not legal advice and does not create an attorney-client relationship. For legal advice, you should contact an attorney.
We hope you found this article helpful. If you’d like to discuss your particular situation, please contact our Sherwood or Searcy office at 501-834-2070 to schedule a consultation. We look forward to the opportunity to work with you.