Many unexpected and unfortunate events can lead to your assets not being distributed the way you would want it or going to those family members you would choose. Also, if you would end up in a vegetative state, maybe the wrong person would decide on your medical care.
These and many other choices would not be made the way you wanted it if you didn’t do estate planning. Getting your affairs in order would mean a lot to your loved ones in case something happens to you.
Create or update your will
Your will is one of the most important aspects of your estate planning. In case you didn’t create your will, the laws of intestacy will be applied to the distribution of your assets. This prevents you from having control over the distribution but it is also more time-consuming and expensive for your family members.
Of course, your wishes may change over time, so it’s necessary to update your will every time you decide on a definite change in it. Also, major changes like the birth of another child or grandchild, divorce, or marriage would require will updates. In case of changes in your assets, review and update the will again.
Decide on your house
Your house is probably the largest asset you have that you will want to pass on to your heirs. If you don’t put it in your will or include the phrase “transfer on death” in it, your children won’t be able to enter your home until the court of law points an executor. This is why it’s so important to be clear about what happens to your home until you are still alive – you want it to go into the hands of those you chose.
The financial power of attorney
The financial POA gives a person legal authority to manage your property and financial affairs while you are still alive in case you are unable to do it at some point for some reason. For example, you could be in the hospital or perhaps in the quarantine due to the pandemic and unable to pay your bills or file your taxes.
The person you choose for this responsibility has to be someone you believe – usually your spouse, sibling, or your close friend. Giving somebody the power of attorney is fairly simple, so don’t wait too long to do it.
Assess your taxes
When you do proper estate planning, your tax burden may get lighter. There are many tax strategies you could include in the estate plan that will allow you to leave as much as possible to your loved ones. You will be able to take advantage of any tax strategy there is if you start planning on time.
Countries change their tax laws and act from time to time, so many expert advisers like Kells Lawyers update their clients who want to create their estate plan on the current law changes. That way, a person can make an informative decision which is also the best one for their loved ones.
Plan for contingencies
A backup plan is always good to have, even in the event of your untimely death. It would be a responsible move to plan for even highly unlikely scenarios, such as both parents dying before their children come of age. If a child’s trustee dies unexpectedly, it’s safer to have several backup trustees or even a professional institution. It only requires adding a few more sentences in the will to include a few unexpected events.
For example, you could create a plan in case a family member becomes addicted to some type of substance. You could also opt for a discretionary trust where the funds would be distributed to the beneficiary until they reach a certain age.
Of course, the crucial part is to select the right trustee – somebody whom you trust and who is highly responsible.
Life and disability insurance
If you already have insurance, maybe you should update your beneficiaries, whether in paper form or online. In case you don’t have insurance and there are people depending on you financially, you should buy one.
The best time to do it is while you are still healthy and young because then your rates will be cheaper. Maybe you will get these benefits from your employer but you should still make sure to see whether those benefits would suffice to provide for your family in case you are not able to work anymore.
Bank and investment accounts
The majority of financial institutions will allow you to choose someone who will get control of your accounts in the event of your death. This person will receive your account automatically without having to administer anything with the court. This is an efficient move in case you have a few assets and a small account balance.
However, you should think carefully about whom you’ll choose to be in this role. This person will actually be the co-owner of your account, which means if they get in financial trouble, your account will be affected, too. And in case you change your mind and you want them removed from the account, they may reject it and put you in a difficult position.
Keep your loved ones in mind – you want them to have a secure future no matter what happens to you. Unfortunately, life is unpredictable and it’s better to cover all the possibilities and scenarios, no matter how unlikely they may seem now.