Your estate is a collection of everything you own, such as your home, vehicles, checking and savings accounts, life insurance policy, personal belongings, and investments. After you die, do you know how your assets will be dispersed? There could be some major issues if you don't plan your estate by detailing what will happen to each thing in your estate. Here are some essential steps toward estate planning.
Start Making Your Will
The first step in planning your estate should always be to start your will. The will is going to describe what property will go to whom after you die. For example, you might want all money from your checking account to be split up and given to each of your children, and the money in your savings account to go toward planning your funeral.
If you have already pre-planned funeral arrangements, you should include those details. If you have minor children when preparing your will, name a guardian who will take them after you die.
Consider Getting a Living Trust
The living trust is optional, but something you might want to consider. A living trust is a legal document that puts all your assets into a trust where you have access to it while you are alive. After you pass, the assets are then transferred to your chosen beneficiaries with the help of a trustee, who is a representative you have chosen.
The benefit of a living trust is that if you die, your children and other relatives don't need to deal with probate court to get your assets.
Choose a Financial Power of Attorney
While a regular power of attorney has the power to make decisions for you if you become incapacitated, the financial power of attorney is related only to your finances. This can be the same as your other power of attorney, or another person entirely.
It is a person who you trust with your finances, that can handle your affairs if you are no longer able to do so. You may get into a severe accident are in a coma, where your finances need to be managed without you. The financial power of attorney is going to do that for you.
Name a Beneficiary
When planning your estate, you also need to name a beneficiary. This is the person who will take over your bank accounts or retirement plans. It is often a spouse, though you can choose anyone you know and trust. The beneficiary will also need to follow anything you have put into your will. So, if you said to leave 50 percent of your savings to a charity, then the beneficiary must legally do so. You can also have brokerage accounts, stocks and bonds registered to transfer to your beneficiary.
Keep Your Documents Safe
When you are done planning your estate, make sure you have all your documents stored in a safe place. You should also let at least one person know where they are, so that after your passing, they can locate these important papers.
They should include any information about bank accounts, life insurance, medical records, and estate attorneys. You also want to include a copy of your will, living trust, name of your beneficiary, and certificates for annuities, stocks and bonds. Don't forget to include information on getting the key for your safety deposit box.