Notwithstanding what we just wrote about average life expectancy being on the rise, we all are unique individuals on our own trajectory. Preparing to live a long happy life is important, but so is preparing for unknowable occurrences. Unpleasant as it may be, not preparing for death or disability will upend the best-intentioned plans.
Estate planning is not an exciting process, but as Eric Hanson often proclaims, “Take care of the hard stuff while it is still easy.” Estate planning is the process of getting your financial matters organized so that your intentions are realized upon your passing. Below are some steps we believe everybody should take.
Inventory your stuff: Take time to organize your possessions, investment assets, and debts. Write down descriptions, locations, and the current values of each item.
Identify your loved ones: This will outline those that will inherit your belongings and assets, but also the people you trust to guide the process in a manner that meets your expectations and values.
Create or update your will: Dying without one means having no say over who receives your assets. Instead, state law determines who gets what. For those with minor children, list guardians for their care, and believe it or not, you can even list a guardian for your pets!
Complete Advanced Healthcare Directive: If you fail to appoint a health care agent, usually a court must appoint someone to make medical care decisions for you. It’s best to ensure your care is handled by a trusted person.
Consider a Financial Power of Attorney: In the event you are disabled, you will want to have a trusted person able to act on your behalf. Putting this in place prior to being disabled will ensure things run smoothly without any hiccups.
List beneficiaries on retirement accounts: Life changes, but often, the beneficiaries people list on their many accounts do not keep up. Make sure you have at least a primary beneficiary listed and consider adding contingent beneficiaries as well.
Create a Living Trust: Creating a will is the bare minimum, but it does not prevent your estate from going through probate. There are many complicated types of Trusts depending on your situation; however most people need a basic Living Trust. This allows for flexibility to change things as your life changes. Once your Trust is created, don’t forget to re-title your possessions and assets in the name of the Trust. You will not lose any control, but it is a crucial step that is often overlooked in the process.
Write a letter of instruction to your Executor and family: This document should direct people on who to contact and where to locate important information, including passwords. Consider putting this letter, along with other important documents above, in a fireproof safe and provide its location to loved ones.
Planning for unforeseen situations in your life will ensure that your loved ones are cared for and your intentions are known well ahead of difficult circumstances arising. Estate planning can get complicated depending on your situation. We recommend working with a qualified attorney to help guide you through the process that is appropriate for you. Taking these steps now will add peace of mind so the focus can get back to living a long happy life.