December 9, 2022

Steps For Creating An Effective Estate Plan

Get your estate plan in order. Design the right estate plan. A solid estate plan helps you plan the future of your assets. It minimizes conflicts within your family when you are gone. It’s one of the best gifts you can give your family. Get legal help with estate planning. Use the following guide to create the best estate plan.

Create A Legally Binding Will

Start with a will. A good estate plan should have a clear will. A will defines how your assets will be divided when you are gone. This will act as your testament. Without a will, the government (through the court) will be forced to step in and distribute your wealth.

Don’t bring confusion to your family. Draw a will first.  Draw it as soon as possible. Keep revising your will. Make it accurate. Involve an estate planning lawyer for an effective will. Ensure that all the beneficiaries are accurately stated in the will.

Consider The Minor Children

Don’t leave your children out of your estate plan. When you are gone, they need proper care. Thus, name a guardian. Name somebody who will manage their property when you are gone. Choose somebody who will handle their finances. Doing this will make their lives easy and happy. They will live like other children.

Draft A Living Will

Also referred to as an advance directive, this legal document gives instructions concerning your future medical care. A living will make important medical care-based decisions. For instance, the living will contain special instructions such as the utilization of life-sustaining measures. This includes breathing tubes, feeding tubes, life support machines, etc.

Power Of Attorney

The next step involves creating the POA. A POA is a legal directive that gives somebody the authority to make important decisions when you are incapacitated. Besides POA, it’s important to have a healthcare directive. A healthcare directive is designed to allow somebody you trust to make important medical decisions.

Preparing these documents requires experience and skills. Ask your lawyer to guide you to design the right POA. Request your attorney to help you craft the best healthcare directive. Check all the legal aspects before making your healthcare directive.

Living Trust

Draft a living trust. Usually, a living trust will hold your assets throughout your lifetime. The assets will be then transferred to the beneficiary upon your death. You will have to choose a successor trustee to execute this process,

A successor trustee is someone you trust. A living trust eliminates the need for probate when you are gone. Remember, taking assets through probate can be complex and time-consuming. Instead, a trustee will pass the assets to the beneficiaries without any issue. The process is direct, simple, and effective. It minimizes future legal battles that are usually expensive and tiresome.

Life Insurance Cover

If you have minors, it’s advisable to invest in life insurance policies. Getting this policy can benefit your kids and give you peace of mind. Plus, if you anticipate that estate taxes and debts will overburden your estate, having life insurance is the best option. Life insurance will help your beneficiary settle. They won’t have to use a portion of the property to setter taxes and debts.

Up TO Date Beneficiaries’ Information

Ensure that the information in the will is correct. Of particular importance, pay attention to the names in the will, trust, and insurance policy. Ensure the information is up to date. Also, name a beneficiary to save your bank account money from going through probate.

The money will be paid to that beneficiary when you die. Remember, the process of probate is long and costly. It can also be tiresome. Don’t put your family through this long process. Name a beneficiary.

Handle All Estate Tax-Based Obligations

Tax obligation is part of the estate planning process. Thus, address these issues before drawing your estate plan. Don’t wait for the state to impose taxes on your estate. In this case, the beneficiaries will have to use a portion of the inheritance to pay the taxes.

Understand how federal taxes work.  Understand inheritance taxes. These taxes can affect your estate when you are gone. Involve your estate planning lawyer when dealing with these taxes.

Organize Your Digital Assets

Pay attention to your online accounts. Remember, if you don’t tell anyone about your online accounts, the funds will be lost. For instance, if you have money in PayPal, include it in your estate plan. The same applies to money in Facebook, email, and cryptocurrency wallet accounts.

List down all your online accounts. Include all the login details. Keep the passwords in a separate book. Store these details with someone you trust. Give the executor authority to access these digital assets when you are gone. Issue strict instructions on how the assets should be distributed.

Instructions Concerning Your Remains

Funeral expenses can be costly. Keeping these costs low is important. Thus, consider making arrangements earlier. Consider opening a payable-on-death account. Inform your lawyer about this account.

All funds in this account will go towards offsetting your funeral expenses. Pre-paying for your funeral is also another option. These accounts should have preferences. For instance, if you have specific body deposition preferences, include them in your instructions. While some people are okay with burial, others will opt for cremation. It depends on your wishes.

Also, make decisions regarding your body’s vital organs. If you want to donate them, put them down on paper.

Proper Storage

Take your estate plan to the bank. At a small fee, the bank will keep these documents safe. However, be sure to inform your executor. You should also tell your lawyer. You can also deposit them with your lawyer. Alternatively, store them on a safe shelf.

The Bottom-Line

Planning is an important aspect of your life. Proper planning makes things easier when you are gone. In particular, estate planning helps you distribute your asses fairly and effectively. It allows you to choose a guardian for your kids. Design the best estate plan. Use the above steps to design the right estate plan. 

 

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