After working hard to own everything under your name now, you’re probably wondering how you can make sure they’re taken care of when you lose the capacity to do it yourself. It can be due to incapacitation or death. To some people, estate planning is done when someone’s nearing the end of their life or their capacity to oversee their property, but in reality, estate planning should be done well into your healthy years.
What is estate planning?
Estate planning is a process where you designate the individuals who will receive the assets and handle responsibilities that come with under your name after you pass away or lose the ability to do it on your own due to injury or illness.
One of estate planning’s goals is to make sure that people you designate to receive your assets don’t get fined with exorbitant amounts of income tax, estate tax, gift tax, and other taxes that may apply to handing down of assets.
With estate planning, not only do you establish a place for you to oversee your own personal and financial situations, but you also get the chance to secure the future of everything you’ve worked for and the people you care about.
Estate planning will require you to work with a wills and trusts lawyer because you’ll encounter many legal documents that should be following the estate laws where you’re located. You will also work with your financial advisor, who can provide your attorney the access they need when it comes to your personal and financial assets.
As the latter won’t have automatic access to your current financial and personal asset records, they’d need to cooperate with your financial advisor to gain access to the information they need to draft the best estate plans based on your capacity preferences.
What are the steps you should take during estate planning?
After understanding what estate planning is and how important it is when it comes to securing your assets, here are the crucial steps you should take once you begin to work alongside professionals in planning your estate:
1. Do an inventory of what you own.
You might be under the impression that only people with millions under their name are the only ones who do estate planning, but you couldn’t be more wrong. Estate planning is something that individuals from all economic backgrounds should do. No attorney or financial advisor will stop you from estate planning because you’re not in the top one percent.
If you look around hard enough on the things that you own, you’d be surprised by how many intangible and tangible assets you actually have under your name.
Tangible assets are physical properties such as cash, vehicles, buildings, and anything you own that you can see or touch. Intangible assets don’t have a physical form and are typically the ones that group pre-paid expenses, patents, goodwill, and accounts receivable together.
2. Realize your family’s needs.
After finding out how much you own, it’s time to consider how you can protect them and your family after the unexpected happens. The common steps will be to see if the life insurance coverage you have is enough for your family’s needs. They’re important if you don’t have a family of your own, but more important if you’re married with children who will be paying for college in the future.
A backup guardian for your young children who are under legal age should also be identified. Writing your will should include who can take custody of your children who aren’t of age when you can’t.
The will should also dictate how you want your children to be taken care of when you’re gone. This creates the need to make plans for your whole family, especially for your children.
3. Review your beneficiaries carefully.
Your will may be something that contains everything you’ve wished for when you were healthy, but not everything dictated there will be followed based on how they were written.
You need to keep track of your current beneficiaries, especially if you’ve created the will or have other plans you created years ago. Doing this will prevent conflict from arising if you pass away or can’t oversee your assets anymore.
Make sure you put the right people under your beneficiaries and update the list based on whom you want to receive what you own when you’re gone. Backup beneficiaries are also just as important as the main names you put on there.
With this knowledge, you can ensure that you plan prepared when something unexpected happens to you. Cover all the necessary bases to reassure the ones you might leave behind.