Planning Your Estate
Estate planning is one of the most emotional and challenging things that you’ll have to do in life. Whether it hurts to think about departing your loved ones or you’re having a hard time deciding what should happen to all your belongings after your death, the procedure is not easy. Estate planning is essential as it ensures that your assets and belongings remain protected even long after you’re gone. Estate planning goes far beyond a will in the sense that it manages your entire asset base after your death and incapacitation. This is why there are many things to consider to ensure that your estate plan is free of any weaknesses. Here are 4 things that you should think about before planning your estate.
1. Up-to-Date Will
One of the first and most important things to think about when planning your estate is the condition of your will. Before you start the estate planning procedure, you must make sure that your will is updated. Anyone who owns assets and is above 18 years old should create a will; it is a relatively inexpensive procedure that will make a great difference in the distribution of your belongings after you’ve passed on. If you have a will, you must make sure that it is up-to-date. The following are some signs that it’s time to update your will: if your financial circumstances have recently changed, if personal or family circumstances, such as divorce, marriage, or separation have occurred, if a beneficiary dies, changes their name, or becomes bankrupt, if the circumstances of your dependents change, or if you’ve come to own assets that can’t be gifted under your will.
If you die without creating a will, the state will bear the responsibility of determining how your assets and funds should be distributed. However, keep in mind that leaving the state to manage your assets and funds is not ideal. Estranged or dissatisfied family members, among other interested parties, can cause legal challenges and unnecessary quarrels. These situations are usually very costly, lengthy, and difficult to resolve and are best avoided by creating a will.
2. Enduring Power of Attorney
While setting up their wills, many people arrange to create an Enduring Power of Attorney. Having EDA means that someone will be appointed to handle your affairs in case of incapacitation. If you end up with illnesses that affect memory, such as dementia and Alzheimer’s, you may be viewed as mentally unfit to manage paperwork or make serious decisions. The legal advisors at https://www.brownhobkirk.com/blog/5-worst-estate-planning-mistakes-you-can-make/ explain that in such a case, someone else is appointed to take your place, possibly instigating family disputes and court battles. To avoid such problems, you should make an EDA and decide who would act in your place in case of incapacitation.
3. Designating Beneficiaries
You should keep in mind that creating a will and designating beneficiaries for your insurance policies, investment and retirement accounts, and other assets, are totally different. If you write up your will without carefully considering beneficiary designations, you might end up with results far different from what was intended. Your beneficiary designations can take precedence over your will and not the other way around. Your will cannot override your beneficiary precedence. This is because wills are generally designed to distribute the assets that are part of your probate estate. Any assets titled POD or TOD (pay/ transfer on death), or in the name of two or more individuals as “tenants by the entireties” or “joint tenants with right of survivorship,” are not part of the probate estate. If you have a super account, you should set up a Reversionary Beneficiary or Death Nomination as it isn’t automatically paid to your estate.
4. Designating Legal Guardians
Designating a legal guardian for your dependents is something that should be given much thought before you plan your estate. You need to always make sure that you have a plan for your dependents, as well as someone that could take care of them after you die. Generally, the legal requirements for a designated legal guardian must be someone who isn’t currently imprisoned, is above 18, and is sane at mind. When you are selecting a legal guardian, you can consider their religious preference, physical abilities, emotional stability, location (would you be disrupting your dependents’ social life?), and financial responsibility. You should always ask the chosen legal guardian for permission before appointing them to avoid any unpleasant surprises.
Creating a strategic estate plan is necessary to ensure that everything goes smoothly when you pass on. It is also a vital element when it comes to retirement planning. To make sure that your estates and assets are well protected after you depart, create an estate plan that doesn’t bear any weaknesses.
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