Ensure your loved ones are taken care of by preparing a will and having appropriate directives in place.
Estate planning is the process by which an individual ensures their final wishes are carried out upon their passing. There are a variety of components and goals. One may try to ensure loved ones are taken care of, children are left in the right hands, medical wishes are respected, and that the fruits of one’s hard work are preserved.
Here are some basic considerations for estate planning.
Create A Will
A will names who you want your assets to go to and who you appoint as legal guardian for minor children.
Before preparing a will, take inventory of assets listed in your name – property, vehicles, cash, etc. What you acquire over the years can be far more than you’d initially think.
In your will, you can designate an executor to ensure your wishes are carried out and to make any final payments as needed. Sites like LawDepot enable you to create a will online for free.
If you have children, have a large estate, or believe someone may contest your will, however, it may be best to hire an attorney who can guide you and provide notarized documents and witnesses.
Protect Your Children
Before designating a legal guardian in your will, discuss the responsibility with the contender(s) to ensure they’re a viable option. It’s a big decision to make as you want to leave children in the care of someone who will raise them with your values in mind and their interest at heart.
You can also choose to name a separate ‘property guardian’ who will manage your child’s inheritance until they are of age of majority, age 18 in Texas. Alternatively, you may create a living trust, designate a trustee, and write out provisions detailing the circumstances by which a child may receive funds.
Designate Power(s) Of Attorney
A Power of Attorney (POA) will allow a designated agent to make decisions on your behalf. A General POA ends if you become incapacitated while a Durable POA would remain in effect. There are two different types of POAs.
- Medical POA: A designated agent will make decisions regarding your health. You can choose to have advance directives for situations like comas, serious injuries, and terminal illnesses along with do-not-resuscitate (DNR) orders. Proactively making decisions can help lessen the burden for loved ones.
- Financial POA: A designated agent will make decisions regarding your finances. This person would be able to handle banking transactions, tax matters, business operations, retirement benefits, monetary gifts, and more on your behalf.
A beneficiary designation on a bank account, life insurance policy, retirement account, or the like supersedes a will. This means the asset will go to the person listed as the beneficiary on the account, not the person listed on your will, if different.
If your accounts aren’t held jointly and don’t have a beneficiary listed, assets will end up in probate. Your will must clearly state who the assets will be transferred to. Otherwise, the court will decide who the assets will be awarded to.
If events like a divorce, birth, or death have taken place, you may need to review and update beneficiary designations. If possible, include a contingent beneficiary should the primary beneficiary not be an option.
Keep important documents in a secure place such as a safe. Ensure your executor is aware of where documents are located and is able to access them.
Here’s a list of documents to get you started:
- Will and trusts
- Insurance policies
- Brokerage and bank account statements
- Property deeds
- Safe deposit box information
- Retirement plans and IRAs
- Organ or tissue donor designation
- Prepaid funeral plan
Print your checklist and plan to periodically review your estate plan to keep up with changes taking place in your life along with changes to applicable laws.