There comes a time in our lives that we need to sit down and think about how we might go about leaving our estate to the next generation. No matter how large or small, estate planning is something that rarely comes without a fuss and will require some planning to ensure an easy transition.
Understanding the requirements of this plan will assist you greatly but despite this, there are often many mistakes that are made. There’s a lot to be said about a well thought out plan and every person that goes through this should be well prepared.
What is an Estate Plan?
For those of you that are unversed in estate planning, like the majority of us, it could be rather unnerving writing one feeling like you are blind to the fundamentals. In layman’s terms, estate planning is the process of deciding who is going to receive your assets (any land or homes, money or treasures) and handle any responsibilities after your death. The main reason for estate planning is to ensure the beneficiary is receiving your assets most cost-effectively. There are many taxes and other such charges to contend with before anything can be settled, so try to avoid these mistakes as they will only leave you with more problems. Estate planning is difficult enough without encountering what appears to be minute problems that end up being the cause of communication breakdown. Ensure you’re doing things correctly from the start, follow the signs, and things should be smooth sailing.
Inventory
You might not think that you have anywhere near enough assets to write them in an inventory but you’d be surprised, it’s not only the tangible assets you include but the intangible too. At this stage, it’s important to be as thorough as possible and include anything and everything you want to be left to someone else.
Tangible assets include things such as your home, any land you might own, or other properties within your portfolio. Vehicles including cars, motorcycles, boats, and anything else you may have that’s considered a motor vehicle. Any kind of collectibles such as art or antiques, valuable coins, trading cards, valuable toy collections, musical instruments, and any other possessions you deem valuable.
Intangible assets are those that we cannot touch, this could be several things. Any money we have in the bank including savings accounts and checking accounts. Any stocks, shares, or bonds you might have including any portfolio. Life insurance policies and retirement plans. Health saving accounts, and any ownership within a business.
Write a Will
Once you’ve decided and written down every asset you want to be divided then it’s time to write your will. This is an important piece of documentation that will state who and where each asset is going to and is the legally binding document. Within your will, you need to name an executor that will have the power and responsibility to pay your debts and distribute the rest of your wealth according to what’s written. If you die without having written a will then your estate will be passed onto any survivors based on state law, in most states this means your partner or children and if you are single it will go to any blood relatives.
Account for Family
When it comes to writing an estate plan it’s not just yourself you have to think about. Your family matter and protecting them is something that needs to be written in and considered. You need to think of things such as your life insurance and how much money your partner will be left with. Things such as mortgage payments often require more than one household income so leaving your spouse with hefty monthly payments could leave them struggling. You should also be thinking of things such as a guardian for your children, especially if you are a single parent, and whilst you’re at it name a backup guardian just in case.
Court fees fighting for custody of a child can be very expensive so you can mitigate that situation by ensuring it’s dealt with first. One more thing, document your wishes for your children. Writing an estate plan isn’t going to be easy, it’s an emotional rollercoaster that will take you through many memories and make you think about a future you are not a part of. Try and take it the best way you can. Avoid every possible mistake by understanding the process and name an executor that you truly trust.
