For those with significant assets, planning for what will happen to your estate and family after you’re gone is imperative to avoid burdensome taxes and to protect future generations. But even those with a more modest net worth generally have substantial reason to make sure their estate plans are solid and strong. Legally binding estate plans allow you to determine exactly how your property should be distributed, reduce the odds of family discord, ensure that your minor children are cared for, and avoid unnecessary and lengthy court proceedings. A valid plan is simply the map you leave behind for your family to go on without you. Here are seven steps to making sure you’ve set up a legacy of certainty and stability for your loved ones.
1. Create a Valid Will
It’s a harsh reality, but most of us know that having a will is necessary. You need a will to make sure that the heirs you’ve chosen will receive the assets you specifically want to leave them. If you don’t create a valid will before you die, your property will be distributed according to state laws of intestacy. In the majority of states, that means your children and spouse will split all of your assets and your legacy. If you’re unmarried and without children, your assets will automatically pass to other blood relatives even if you wanted a friend to receive them instead.
2. Set Up a Living Trust
Another way to establish secure estate plans is to set up a living trust. If your property is held in a living trust, your heirs will be able to skip the expensive and time-consuming process in probate court.
3. Establish Health Care Instructions
It’s also imperative to consider your personal health care wishes. Having instructions set up for your care is important if you’re incapacitated and unable to make your own medical decisions. Establishing a health care directive such as a living will and medical power of attorney gives the person of your choosing the power to make decisions for you.
4. Designate Financial Power of Attorney
For your finances, consider designating a durable power of attorney which will give someone you trust the authority to take control of your property and finances in the event that you are unable. This person will handle all of your finances and is typically called an attorney-in-fact or an agent.
5. Name a Personal Guardian for Minors
You should also name a trusted adult to manage any property or money that any of your minor children receive from you. This same person is typically also the personal guardian you designate for your children in your will.
6. Pick Beneficiaries
Picking beneficiaries for your bank accounts is also a good idea if you want to make those accounts automatically payable to the beneficiaries when you die. This will save money by allowing those funds to skip probate.
7. Settle Funeral Expenses
Lastly, you can save your loved ones additional stress if you make your wishes official as far as whether you prefer cremation or burial. You can also set up a funeral prepayment plan or account at your bank that will cover any funeral expenses.
Planning ahead by following these simple steps ensures that you will leave behind a legacy of security and stability rather than one of chaos and undue stress.