Planning Your Estate In 4 Steps

Your estate is made up of everything you own—cash, investments, business interests, property, and all of your personal belongings—and, upon your death, those items will be bequeathed in some manner. An estate plan is your opportunity to prescribe that manner by dictating which and how much of your assets are passed to whom. The biggest aversion to estate planning is the fact that you have to look your own morbidity squarely in the face. Having come to the unavoidable conclusion that you will pass away at some point, it becomes a smart, albeit not always pleasant, decision to create an estate plan. Before beginning a task, it’s important to identify your goal. In this case, it's to answer the question, “In the event of my death or otherwise incapacitation, how do I want my assets distributed?” With that overarching objective in mind, we can move on to outlining the ins and outs of estate planning in 4 steps.

Step 1.) Inventory

Start by making a list of all of your assets. It may be helpful to make one list of tangible assets and one list of intangible assets.

Tangible assets may include: real estate, cars and other vehicles, collectibles, antiques, or other personal possessions.

Intangible assets may include: checking and savings accounts, mutual funds, life insurance policies, retirement plans, business ownership, etc.

After  inventorying your assets, you'll need to estimate their individual values. You may be able to find outside valuations to help with this task, such as recent appraisals of your home or financial account statements. If no such outside valuation exists, each asset still needs a value. Do your best to value your assets based on how you expect your heirs will value them. Doing so will help you ensure that your assets are equitably distributed and can minimize the risk of squabbles between loved ones.

Step 2.) Establish Directives

Defining your legal directives is an important part of a complete estate plan, since it’s not all about what happens in the event of your death. One facet of estate planning focuses on what happens if you are still alive but unable to communicate. None of us like to consider such traumatic circumstances, but, in such a situation, there are several legal directives that you should or could have amongst the pages of your estate plan.

Living Will/Medical Care Directive: This legal directive is made of your wishes pertaining to your medical care in the event that you’re unable to make those decisions yourself. In this directive, you also have the ability to name a trusted person as your medical power of attorney.

Durable Financial Power of Attorney: This legal directive gives someone else the power to manage your financial affairs if you are medically incapable of doing so yourself.

Limited Power of Attorney: This optional document imposes limits to what your named representative can do on your behalf. It’s useful if the idea of giving someone ultimate control over your finances concerns you.

Step 3.) Review Beneficiaries

Remember that life insurance policy you got with your ex? If you don’t make sure to check the beneficiaries of policies established perhaps many years ago, she’s the one who will receive the policy’s payout upon your death, and your current wife will be out of luck. Beneficiary designations on retirement and insurance accounts can outweigh directives in your will. Make sure the right people get the right stuff by reviewing those designations and updating them as needed.

Step 4.) Consider Consulting an Expert

Whether you should recruit a professional attorney and possibly tax advisor to assist in your estate planning depends on your situation. If you have simple wishes in a small estate, you may not need professional help. But, if you have doubts about the process, consulting an estate attorney can be invaluable in helping you determine if you’re on the right estate planning path. State-specific taxes, such as inheritance or estate taxes, can make navigating the process pretty complicated without an attorney’s guidance. Large or complex estates, such as for those with business interests, heirs other than family members, or a typical child care factors, an estate attorney is essential for navigating potential complications.

A professional estate planning lawyer acts in a fiduciary capacity for you, which means that she or he is required by law to do what’s in your best interest. An estate planning attorney knows all the applicable tax laws and documents and it will minimize court costs and unnecessary legal fees. Plus, as opposed to online will writing programs, an estate planning attorney provides an ongoing relationship and will review and update your estate plan as laws and your financial and familial situations evolve over time. If you would like to consult with a local, experienced estate planning firm, reach out to RM Nelson Law at (440) 653-5388 or fill out the contact form on our website. We look forward to tailoring an estate plan to perfectly meet your needs!