Estate Planning Tips to Know About
Benjamin Franklin once said that in life there are only two things for certain: death and taxes. To date, there are still a number of Americans who do not have up-to-date estate plans that protect themselves from unfortunate events like accidents, illness, and even death. Such an incident poses potential problems to family and loved ones who will be most affected by such tragedy. This reality is exactly why going through the process of estate planning and writing a will is necessary. It not only gives a peace of mind to how you clearly want decisions to be carried out, but it can also be the greatest gifts to give to one’s heirs. So, to begin estate planning, familiarize yourself with these helpful tips.
STEPS TO KNOW IN ESTATE PLANNING
1. First things first. Take an inventory of your current assets, as well as your liabilities. According to Investors Business Daily, doing this first allows you to know exactly what your net worth is and what your entire estate includes. In addition, be sure to review and update the beneficiaries you designate in your life insurance policies, retirement plans, payable-on-death accounts and other pertinent plans. Be keen with these designations after getting married, after a divorce, or other major changes.
2. After determining your beneficiaries, make a decision on how your individual assets should be distributed. Barbara Lawrence, chair of trusts and estates at the Herrick, Feinstein law firm in New York, stresses that this decision should also comprise the manner in which the heirs will receive the benefit. Will it be through a trust fund or given outright? It is important that the estate is divided fairly, equally, and equitably.
If you have children, West Hollywood, California attorney, Josh Passman, suggests getting a trust fund that allows them to receive the money whenever they reach a certain age (18, 25, and 30 usually). A final note on this step is to never assume that family members will be able to decide on this by themselves. Often, this causes disputes. To avoid any misunderstanding, openly discuss this with the individuals you would like to include as heirs. It is best to ensure that your assets go to the right people without any problems.
3. Write a will. This is the only way to safeguard that your possessions are distributed according to your wishes. Certain conditions like setting up a trust or other specifications are also set in place through a written will. Also, Boston.com adds that the will allows parents to name a guardian who will care for their minor children if something happens. Without it, what happens to your estate will be decided upon by state law as well as appointing a guardian for your children. Clearly, you would want to have such decisions made by you alone.
4. Choose a professional executor to manage your plan. The Massachusetts Society of CPAs specifies that the executor’s responsibility is to distribute your assets according to your will and to pay your existing debts. Usually, it is the spouse or the eldest child chosen as the executor but it can be advantageous to consider other options especially when your estate involves a long and tricky process. Professional executors can be a certified public accountant, trusted advisers, or lawyers who have expertise in administering estates. The impartiality can be beneficial if the executor is not a member of the family.
5. Be absolutely sure your beneficiaries know exactly where your vital documents are. Having a list of all your papers such as marriage, birth, and death certificates of those you choose as heirs, like your children and spouse, are advisable. Stock certificates, insurance policies, retirement statements, and important financial records are also supposed to be included. Boston.com strongly recommends giving your executor the names of your accountant, attorney, stockbroker and other advisers.
COMMUNICATION: THE ESSENTIAL KEY IN ESTATE PLANNING
The goal of estate planning is to create a plan for managing your assets and ultimately, be able to leave a legacy for your family members and the following generations. This is why communicating with everyone involved in the process of estate planning is an important key to guarantee its success. A publication by North Dakota State University (NDSU) on Family Communication and Estate Planning gives the following guidelines and essential questions in the process of communication. These are:
- Who is involved in the conversation? Who do you trust or not?
- What will be discussed? What will topics at specific times be covered during the dialogue?
- When and where will the dialogue take place?
- How will the information be shared with everyone involved?
When the conversation does happen, always be sincere about your intentions and stress the importance and benefits of the dialogue to everyone. Be an active listener and take note of any points of concern because discussions like this can actually cause some anxiety. Make it very clear that you want to work with every beneficiary as partners. Being able to communicate openly will surely bring everyone involved closer together.
Early on, be sure to sit down with your heirs and beneficiaries to have an open and honest discussion about every detail. These dialogues should include your attorney or executor in order to properly lay out your wishes in writing. Doing this prevents any court issues.
THE BEST TIME TO START ESTATE PLANNING
Some people begin estate planning when they already have children or when they are about to reach the retirement age. But what most people don’t know is that when it comes to estate planning, CNN Money says that it is never too early to start. Actually, the best time to do this is now.
Planning your estate now does not mean that you are dying tomorrow. This process is rather flexible. Along the line, you can easily change certain details according to your specifications.
When the conversation does happen, always be sincere about your intentions and stress the importance and benefits of the dialogue to everyone. Be an active listener and take note of any points of concern because discussions like this can actually cause some anxiety. Make it clear that you want to work with every beneficiary as partners. Being able to communicate openly will surely bring everyone involved closer together.
Early on, be sure to sit down with your heirs and beneficiaries to have an open and honest discussion about every detail. These dialogues should include your attorney or executor in order to properly lay out your wishes in writing. Doing this prevents any court issues.
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