When Should I Set Up a Will and Estate Plan?January 22, 2016
Don’t be part of the majority of Americans without a will and estate plan—Get your planning started as soon as possible.
Are you part of the (roughly) 70% of Americans without a will and estate plan? Dealing with a will and estate plan can be easy to put off because facing the reality of death is tough. Thinking about it in an alternative way helps—by setting up your will and estate plan you are bringing organization to your life and directly helping your family, too (even if it seems indirect!) It is never too early to start thinking about where you’d like your money and property to end up after you’re gone.
Most of us would like to keep our assets within our family, but this is not possible unless you have set up a will and estate plan. Starting this process involves:
- Evaluating your assets- Any retirement accounts, investments, real estate interests, insurance policies, business ventures, etc. are part of your stock of assets—Take account of everything currently in your possession and who you would like as the inheritor of each asset.
- Build your estate planning team- Depending on your estate, you might need an accountant, an attorney, a stock broker, a life insurance agent, and a financial planner.
Essential parts of an estate plan
- A will- A will is an indispensable part of an estate plan. Without a will, the status of your belongings and property post mortem will be in the hands of the state. A will lets you designate heirs for your belongings, but also individuals that will look after your young children if you have any.
- An executor- If you do not name an executor of your choice on your will, a probate court will decide for you. Keep in mind that a probate court will also choose a guardian for your children, if need be. The job of estate executor is complex and time consuming so make sure you choose appropriately. There are advantages to hiring a professional, namely that they are impartial and experts in the field of estate planning, but there are also advantages to hiring someone with a more personal connection to the family, who is more in tune with the family and its needs and who will likely charge very low or no charge for his/her services.
- Durable power of attorney- Deciding who will make health and financial decisions for you if you ever become incapacitated depends on a document called the “Power of attorney”. You can designate a certain person to handle your health care decisions (spouse, often times) and another to handle financial matters (an accountant, for example).
- Living trust- A living trust allows you to name a successor trustee to manage your assets in the event of incapacitation. This differs from a durable power of attorney in that it keeps your estate’s value, assets, and beneficiaries confidential. Whoever you name as a trustee gains control over your estate as soon as you become incapacitated or die, but you are able to manage the trust during your lifetime, hence the name “living” trust.
How often do I have to revise my estate plan?
Think about it, as soon as your life circumstances change, so do your post mortem wishes, right? If you get divorced, have children, become disabled, acquire property, deal with family deaths, etc. your estate plan must be revised. Here are some key influencers of your estate plan’s status:
- Children- As soon as you have kids, you need to decide who you’d like as their guardian in the event that you are not able to care for them.
- Marriage- If you get divorced, it’s likely that you will no longer be leaving assets to your ex-spouse.
- Inheritors- Have any of your potential inheritors passed away? That will require an adjustment, too. If any of your inheritors have become disabled, you will need to ensure that their inheritance from you will not affect their governmental assistance.
- Changes in assets- Have you started, bought, or sold a business? This will change the way your estate plan is organized as well.
Questions about setting up or adjusting your estate plan? Contact us.