Understand The Key Elements Of Estate Planning.
Many people think that estate planning begins and ends with the writing of a Will. And even then only about a third of all Americans have Wills in place. Drafting a Will is an important first step in estate planning, but the process involves much more, such as financial, tax, medical and business planning. With proper estate planning, you can determine how your assets will be handled before and after your death, who will make medical decisions for you and how minor children and other family members will be cared for. In addition to a Will, good estate planning involves doing some of all of the following things.
Consider a trust.
Placing your property in a living trust will help your family avoid probate, a sometimes long and costly court-supervised process for transferring assets to beneficiaries. The person who you have named as the successor trustee transfers ownership, allowing for a faster resolution and avoiding court fees.
Write a Living Will and name a Health Care Proxy.
Without a living will, your wishes as to what health care decisions are made should you be incapacitated may not be followed. You can avoid this by working with a lawyer to draft a strong healthcare proxy. A healthcare proxy designates who will be making decisions on your behalf when you are unable to make them for yourself.
Name Beneficiaries.
Any bank accounts or retirement plans you have should have beneficiaries named to them. Naming beneficiaries makes the account automatically payable on death to your beneficiary, again allowing your family to skip the probate process. In most states, you can also register your stocks, bonds, or brokerage accounts to transfer to your beneficiary.
Make a Durable Power of Attorney.
By naming an agent, or attorney-in-fact, you will ensure that someone you trust will handle your financial affairs should you become unable to do so. An attorney-in-fact can be named to serve for a specific amount of time or until the power is revoked. Remember, this arrangement is not set in stone. You have the power to revoke the authority of your agent at any time should circumstances change.
Protect your children and their property.
It is important that you name both guardians and successor guardians for your children. This way should something happen to one guardian there is a clear plan for establishing who will care for your children. Also, you should name an individual who will manage any money and property your minor children may inherit from you. This may be the same person as your guardian or someone else.
Make final arrangements.
Inform a trusted individual as to how you would like loved ones to be notified of your death and what your wishes are with regards to your funeral arrangements. Make sure that you have planned for the cost of these arrangements to avoid putting unnecessary stress on your family.
Make arrangements for your business.
Depending on your particular situation, you should either have a succession plan, buyout agreement or sales arrangement for any businesses you may own. This will ensure that your business and its assets are transferred or liquefied in a manner that follows your wishes.