More than half of Americans don’t have any estate planning done. Are you among them? Then it’s time to get your affairs in order.
Estate planning might not feel like a priority. You’re planning for a future event that often feels impossibly far away. However, those tedious estate planning documents aren’t there to protect you — they are for your family. Drafting these essential documents is a way to help your loved ones.
Not sure which estate planning documents you should have? We’ve created this guide to making a basic estate plan so you can get started. Keep reading to prepare for your family’s future.
What is Estate Planning?
When you talk about your estate, you’re really talking about all the assets you own in the world. This includes real estate like your home, as well as your car, bank accounts, investments, art collections, and more. Basically, if it has value and you own it, it’s part of your estate.
This means everyone has an estate, and estate planning is for everyone — even if your estate isn’t large. Your estate plan ensures that your possessions get distributed the way you’d want them to after you pass away. This might mean leaving things to certain family members, making a donation to charity, and more.
No matter what, someone will have to decide what to do with your belongings when you’re gone. Estate planning ensures that this won’t be a stressful process for your family or friends. Instead of having to guess over what to do with your things (and face the extra emotions the process brings up), they can follow the clear plan that you left behind.
Estate planning also helps prevent them from having to handle unexpected expenses, such as court costs, in the struggle to distribute your estate. This is a legal process and it’s easy to make mistakes without a plan. But if you have proper estate planning documents in place, you can minimize the difficulties.
Your Estate Planning Checklist
Now that you know what an estate plan is and why it matters, let’s delve into the exact estate planning documents you’ll need. This isn’t a comprehensive list, but will give you a basic estate plan that you can start with.
Your will is the primary document that determines what should get done with your estate. Without a will, the state often gets to decide what happens with your assets.
Some wills are straightforward, while others are more complex, depending on what you have. However, it’s best to create a detailed will rather than a “simple” will (for more on the difference, visit the Verhaeghe Law Office website). Your will needs details for the sake of clarity.
A lot of will-making software exists, but this is a document that you should create with the help of a lawyer instead. They’ll help you create the will, as well as relevant attached documents like a personal property memorandum to designate who gets what items.
2. Guardianship Designations
If your will doesn’t have a section on guardianship, you’ll need to create this secondary document to cover who is responsible for your children or dependents.
You’ll want to pick the guardian carefully. Make sure they really want the job of caring for your dependents and will be able to afford to do so. Don’t forget to also name a second guardian who can take over if the first one can’t.
Estate planning deals with things, but it’s really for the people in your life. So make sure to have the proper guardianship documents so that everyone will be taken care of in the way you see as best.
3. Durable Power of Attorney
With a regular power of attorney, the power of attorney only applies as long as you are mentally and physically capable. If you become incapacitated for some reason, you’ll want a durable power of attorney that will still apply.
If you don’t have a power of attorney, the court might end up deciding what to do with your estate.
The person you give power of attorney to needs to be someone you completely trust, such as a close friend or family member. Don’t forget to have a backup person named in this document, too.
The person with power of attorney becomes responsible for everything from making healthcare decisions to paying your bills if you’re unable to do so. Your power of attorney document isn’t complex, but it’s very important, so you shouldn’t wait to create one.
4. Digital Asset Inventory
In today’s world, many of our assets are hosted online. Having an inventory of these will make life much easier for the surviving members of your family.
This can include everything from information about paying your bills online to access information for your social media accounts. Try to think of the things your family members would need to handle for you online if you couldn’t, and include all of that information in the document. You can create this inventory without a lawyer, but make sure it’s clear and comprehensive.
5. Living Trust
Finally, the living trust is another one of the most helpful documents to include in your estate plan.
With a will, your family has to get through the long probate process in order to move forward. This involves going to court to get your will authenticated. But if you have a living trust too, your assets can be handled without dragging your loved ones through the probate process.
A living trust also takes effect when you’re incapacitated, not just after you die. Although a living trust can’t replace a will, it’s a very helpful supplement that can reduce a lot of your family’s stress.
Need Help With Estate Planning Documents?
These estate planning documents will provide an immense level of help to your surviving family members. You should get started on them today — but you don’t have to do it alone. Contact a lawyer to make sure everything is legal and right.
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