Many people do not believe they need an estate plan. The truth is that everyone should have a plan and be accounted for upon death. Your estate is comprised of everything you own— your car, home, other real estate, checking and savings accounts, investments, life insurance, furniture, personal possessions. It does not matter how big or small, everyone has an estate and something else in common—you can’t take it with you when you die.
An estate plan give you control in how those things are given to the people or organizations you care most about. To ensure your wishes are carried out, you need to provide instructions stating whom you want to receive something of yours, what you want them to receive, and when they are to receive it. You will, of course, want this to happen with the least amount paid in taxes, legal fees, and court costs.
That is estate planning—making a plan in advance and naming whom you want to receive the things you own after you die. However, good estate planning is much more than that.
A will enables you to specify who you want to inherit your property and other assets. A will also enables you to name a guardian for your minor children.
Healthcare documents spell out your wishes for health care if you become unable to make medical decisions for yourself. They also authorize a person to make decisions on your behalf if that should prove necessary. These documents may include a living will, a power of attorney agreement, and a durable power of attorney agreement for healthcare.
Certain financial documents can outline your financial wishes. If you become unable to make decisions for yourself, these financial documents can be structured to empower a person to make decisions on your behalf. These documents may include joint ownership, durable power of attorney, and living trusts.
In some cases, naming a beneficiary for bank accounts and retirement plans makes these accounts “payable on death” to your beneficiaries. In other cases, you will need to fill out a “Payable on Death” form.
When was the last time you assessed your life insurance coverage? Have you compared the life insurance benefit with your financial obligations?
If you and your spouse have more than $11.2 million in assets (for 2018), you may want to consider taking steps to manage federal estate taxes, which will be due at the second spouse’s death.
Do you have a succession plan? If you own a business with others, you may also want to consider a buyout agreement.
A letter of instruction is a non-legal document that outlines your wishes. A strong, well-written letter may save your heirs time, effort, and expense as they administer your estate.
Your heirs will need access to the specific documents you have created to manage your estate. These documents may include: