Start Planning Your Estate Today

Tips on how to plan your estate at any age

11/25/2013 11:30:34 AM
Regardless of how old you are or how big your estate is, it’s never too late (or too early, for that matter) to start your estate planning. While it’s not enjoyable to think about what would happen to your assets in the event of your death, it’s an important matter to address.
“An effective estate plan is necessary if you want to make sure that the right parties inherit your assets,” according to
The National Association of Estate Planners & Councils notes that more than 120 million Americans don’t have up-to-date estate plans in place to protect themselves and their family members in the event of their death. Planning out your estate can be one of the most important details you can take care of for your loved ones because it gives them clear direction on what action to take if you become ill and also gives them specific details regarding your wishes for when you pass away. Your will also is used to name a guardian for your minor children. When considering guardians make sure you consider who will raise your children and make sure you ask them in advance if they are willing to accept such a responsibility. Also consider if your children would have to move away from their school and their friends if something were to happen to you.
Details that go into planning your estate include preparing a will, delineating how you would like your assets to be distributed and more. Failing to do these things will make dividing up your estate much more difficult for your beneficiaries when the time comes. Here are some tips to consider when starting these tasks:
  • Preparing your will: If you don’t prepare a will for your assets, the law will determine who will inherit your assets. Items to add to your will include nonfinancial assets that you would like to be given to certain beneficiaries, such as cars, jewelry or other household items.
  • Allocating your assets: If you plan to allocate your assets to pay for specific expenses, it may be necessary to create a trust that includes these provisions. An example would be earmarking a special amount to cover your child’s college expenses.
  • Minimizing income and estate taxes: You can help minimize the amount your beneficiaries may owe in income and estate taxes on the amounts they inherit by using tax-efficient strategies. An example would be to leave taxable assets to charities and leave tax-free assets, such as Roth retirement accounts, after-tax savings and life insurance, to your beneficiaries. Another way to reduce your taxable estate would be by gifting amounts to your beneficiaries while you’re still alive; the gifts would be nontaxable if they were under a certain amount for each individual. notes that there are three specific documents you will need to draw up; these documents are often referred to as advance directives. They are a living will, a health care power of attorney and a letter of instruction. These documents should be reviewed every few years so that they can be adjusted as life changes occur, including the birth of grandchildren, a divorce, etc.
Living will – In addition to delineating who will receive your assets, you should also specify for both medical professionals and your family any medical treatment you want to receive or refuse.
Health care power of attorney – This delegates another individual – spouse, trusted family member or close friend – to make health care decisions for you in the event that you cannot make them yourself. You may have also heard the phrase “durable power of attorney,” but that person can control only financial matters.
Letter of instruction – This should include any special requests you would like to see carried out in the event of your death, including plans for a funeral and names of individuals to contact. You should include important phone numbers for your place of employment and your insurance agent.
Additional details you will need to address include assigning a qualified executor who will pay your debts and distribute your assets and making sure your family members know where to find your advance directives.

Related Blog Posts

Easy Green Habits You Can Adopt Today

Nine quick changes to benefit the environment Full story...

Tips for Couples Managing Joint Accounts

Steps to take to ensure a strong financial relationship together Full story...

Smart Ways College Grads Can Save

Tips to help college grads start on the right path to their financial future Full story...