According to data from the National Association of Estate Planners & Councils, more than 120 million Americans have not updated their plans to protect their families when an accident, illness or death occurs .
Starting the estate planning process can be the most important gift you give your family so that your loved ones do not remain in uncertainty and conflict. These five steps can help you start the process and inform your family of your last wishes.
1. Create a will
If you die without a will, the court will decide what to do with assets, debts and even your children. This is called a dying intestate and leaves the distribution process to the law of the state in which you reside. To write a valid will, just indicate exactly who you want to inherit from your property and also indicate who you wish as a guardian for your children in case something happens to the property. other parent too. If the proper planning is not complete, your family will be locked up in the Probate Court, which is time consuming and expensive.
2. Consider a trust
If you want to completely avoid the probate process, consider creating a revocable trust relationship. If you hold your assets in this manner, you will essentially transfer the ownership of your property to a trust with the exact details of the distribution upon your death. As the information is contained in a single document, you can completely ignore the approval.
3. Set up a life insurance
Life insurance is a good idea, especially if you have young children, if you are a homeowner or if you will probably have to pay a large portion of the estate tax after your death. You will need to ensure that your family will have adequate coverage to cover all their expenses when you are no longer there to help you. Consider taking out term life insurance, which can be an affordable option because you pay a fixed premium for the duration of your contract.
4. Assemble end-of-life documents
Beyond wills, trusts and life insurance, essential estate planning must also involve the creation of three important documents at the end of life. To help your loved ones respect your wishes when you can not, you must make sure that they have these three documents:
– A power of attorney that allows your designated agent to manage your legal affairs and financial situation.
– A form that allows your doctors to communicate information to selected representatives.
– A pre-notification form in which a person is designated to make medical decisions in case of incapacity and a birth test telling you in detail the treatment you want to get at the end of your life.
5. Learn more about inheritance taxes
Although the majority of estates are not taxable, if you have a taxable wealth of more than $ 5.43 million, it is important to understand how much you will need and how to minimize it strategically. For example, if you leave all assets to your spouse, this distribution will be exempt from tax.
Despite the critical nature of the estate planning process, it can be difficult to engage in conversation. If you prioritize these simple steps, you will have peace of mind knowing that you have done everything in your power to protect your family after your death.