For those with significant assets, it is imperative to plan for what will happen to your estate and family after you are gone to avoid burdensome taxes and protect future generations. But even those with more modest net worths usually have substantial reasons to make sure their estate plans are sound and solid. Legally binding estate plans allow you to determine exactly how your property should be distributed, reduce the chances of family discord, ensure that your minor children are cared for, and avoid lengthy and unnecessary court proceedings. A valid plan is simply the map you leave behind for your family to move on without you. Here are seven steps to ensure you have established a legacy of certainty and stability for your loved ones.
1. Create a valid will
It is a harsh reality, but most of us know that it is necessary to have a will. You need a will to ensure that the heirs you have chosen will receive the assets you specifically want to leave them. If you do not create a valid will before you die, your property will be distributed according to state intestacy laws. In most states, that means your children and your spouse will divide all your assets and your legacy. If you are not married and do not have children, your assets will automatically pass to other blood relatives, even if you want a friend to receive them for you.
2. Establish a Living Trust
Another way to establish secure estate plans is to establish a living trust. If your property is held in a living trust, your heirs will be able to bypass the costly and time-consuming process in probate court.
3. Establish instructions for health care
It is also imperative to consider your personal health care wishes. Having established instructions for your care is important if you are incapacitated and unable to make your own medical decisions. Establishing a health care directive, like a living will and medical power of attorney, gives the person you choose the power to make decisions for you.
4. Designate a financial power of attorney
For your finances, consider designating a durable power of attorney that will give someone you trust the authority to take control of your property and finances if you can’t. This person will take care of all your finances and is usually called a power of attorney or agent.
5. Appoint a personal guardian for minors
You must also name a trusted adult to handle any property or money any of your minor children receive from you. This same person is usually also the personal guardian that you appoint for your children in your will.
6. Choose beneficiaries
Choosing beneficiaries for your bank accounts is also a good idea if you want those accounts to be automatically paid to the beneficiaries when you die. This will save money by allowing those funds to skip probate.
7. Settle funeral expenses
Finally, you can save your loved ones additional stress by making your wishes official as to whether you prefer cremation or burial. You can also set up a prepaid funeral plan or an account at your bank that will cover funeral expenses.
Planning ahead by following these simple steps ensures that you will leave a legacy of security and stability rather than chaos and undue stress.
