Estate Planning: 5 Top Tips to Simplify the Process
You spent your adult life so far working hard and bettering your situation. You dutifully funded one or more retirement accounts. Maybe you even dabbled a bit on the stock market or invested in some rental property.
Now that you're a little older, you're thinking about the future and what to do about your estate. Unfortunately, while it is an essential step for everyone, estate planning can prove complicated.
If you're wondering how you should handle your estate or even just where to start, keep reading for our guide to estate planning. We'll provide some estate planning tips that should simplify the process.
1. Inventory Your Assets
The first major step is a comprehensive inventory of your assets. That means your tangible assets and your intangible assets.
Tangible assets include things like:
- Real estate
- Collectibles like art or coins
- Vehicles, such as cars, boats, and RVs
- Personal property such as jewelry or antiques
Your intangible assets include:
- Bank accounts
- Retirement accounts
- Life Insurance
With things like real estate, collectibles, and antiques, you'll need some kind of appraisal or valuation to get a picture of their current worth.
2. Account for Debts
You should also inventory your debts. If you don't know what happens when you pass away, creditors get first dibs on your estate.
Some common types of debt include:
- Credit cards
- Auto Loans
Inventorying your debts lets you make a plan to settle those debts before you die or provide a means for your beneficiaries to do so. For example, you can increase your life insurance policy value to cover those debts.
3. Get the Legalities Settled
There are several legalities you should get settled as part of your estate planning. You need a properly witnessed last will and testament that designates beneficiaries and assigns assets. You may also want medical and financial powers of attorney in place.
If your children aren't of age, you'll want guardianship settled ahead of time.
4. Get Professional Assistance
Since inheritance and tax laws vary from state to state, you should get professional assistance from a lawyer and possibly a financial advisor. They can provide you with estate planning advice.
A lawyer can also ensure all of your documents pass legal muster. Both can help you create trusts to minimize taxes for your beneficiaries.
5. Review Your Plans
Your situation will likely change over time. You may take a major financial loss or build a small fortune. You may get married or divorced. Revisit your estate planning periodically and update it to reflect your new circumstances.
Estate Planning and You
While estate planning can take on a morbid cast, it's a key step in helping your family. It lets you deal with problems that you don't want to pass on your kids or the executor of your estate, such as lingering debts.
It also lets you make clear-headed decisions about what you want friends or family members to get after you die. Professional financial or legal assistance can make the process easier.
Looking for more tips? Check out the Personal Finance section in our article library.