It’s true that no one likes to contemplate their own mortality, but planning ahead has clear advantages. The fact is, after you pass, someone close to you will be responsible for overseeing your funeral arrangements and the distribution of your belongings. Planning your estate distribution ahead of time is a very simple way to alleviate some of the stress that will fall on the person responsible to administer these arrangements. Planning ahead will also ensure that your belongings are transferred over to the right hands and that everything reaches its designated place.
The Will Is The Way
According to a 2011 poll by the AARP, only one-third of Americans have a written will. That means that the vast majority of people do little to nothing about their estate planning, which leaves the planning up to chance or to someone else’s discretion. It is important for us to understand that the purpose of a will is to eliminate any questions or confusion relating to the executor’s handling of your assets at the time of your passing, including who should be the recipient of those assets. However, should you choose to forego preparing a will, the responsibility of the executor is passed on to the state, which then decides the distribution of your estate without regard to your preferences, since they are not explicitly known.
If you have young children, a will is the best way to properly delegate who will be their legal guardian in the event of your passing. With the assistance of an attorney specializing in wills and estates, you will confirm whom their legal guardian will be and may determine any additional arrangements for the care of your children. It is up to you how detailed you wish to be when writing these types of arrangements into your will, but being specific can greatly assist the relationship between your children and their designated guardian.
It helps to think of a will as your last method of communication with the mortal world, and therefore your last opportunity to ensure that things are executed the way you intended.
Begin by making a record of all of your assets from top to bottom — this includes investment or investment accounts, retirement and savings accounts, insurance policies, real estate or business interests, and perhaps collectible or sentimental items you own. After listing each of your assets, you will need to determine whom you would like to receive these assets. After you make this determination, you will want to designate the executor of your will; this person will oversee the distribution of your assets.
Once you are ready to begin drafting your will, you may create this legal documentation through online platforms or by hiring an attorney to prepare it for you. Attorneys usually charge anywhere from $500 to $2000 to create a full estate plan, but they are there to walk you through the entire planning process and make it as painless as possible.
Delegate and Divide
Choosing an executor can be a very difficult process, but it’s a necessary step to ensure that your assets go to their rightful owners in a proper and timely manner. In addition to executing the demands of the will, an executor represents your estate and its financial responsibilities.
Your executor can be a friend, a relative, or you may hire a professional or institution to be the executor of your will. Regardless of whom you choose, be sure that you can trust them and that they are willing to take on the responsibilities associated with your estate. If you choose a professional, you will typically agree to a rate or yearly fee that will be satisfied through your estate.
You should also assign a power of attorney to your estate. The power of attorney document allows you to appoint a person, or an organization, to manage your affairs should you become unable to do so. This designates a person who will be responsible for representing your estate financially and handling your bills, investments, and other assets under certain stipulations. This person should be someone you trust to be able to handle your financials in the event you become too ill to do so yourself.
You will also want to choose a health care power of attorney, which is a document in which you designate someone to be your representative or agent, in the event you are unable to make or communicate decisions about all aspects of your health care.
All power of attorney agents will be required to act in accordance to your wishes and within the operating boundaries set by your will or other end-of-life documents.
Consistency Is Key
After taking the time to plan out your estate and properly delegate all responsibilities, it is up to you to make sure all corresponding documents remain current. Be sure to revisit and update your will on a regular basis, be that yearly or after any major life events. This way, you can ensure that any ongoing relationships and dynamic shifts are properly addressed in the way you assign your assets. To avoid any disagreements or confusion, you may wish to communicate with your heirs accordingly when your will is updated or revised. That way, it is clear how you assets will be distributed.
Planning your estate may seem to be a fairly arduous process, but it is the only way to ensure your assets are distributed as you intended, and with little to no anxiety for family members and heirs. A will allows you to have all assets (earned, inherited and otherwise) passed down in the way you see fit. The advantages of estate planning are clear, so it is recommended you put in the time to plan your estate now to ensure your preferences are met.