What Are The Six Basic Steps To The Estate Planning Process?
Nobody wants to face litigation over an estate which is why having a proper estate plan is crucial. The best way to have a proper estate plan in place when you need it the most is to start planning it early. An estate plan can help protect your loved ones and family from financial ruin after you pass away.
Estate planning gives you control over how you want your assets to be distributed to your loved ones after your death.
A major portion of your assets can be transferred to your heirs and beneficiaries, saving them from lengthy and difficult probate court procedures. It is always a good idea to consult an estate planning attorney who knows his field and tax planning.
Why do you need an estate plan?
- An estate plan takes care of your spouse and children once you pass away.
- The passing away of a loved one is a difficult time and traumatic for family members. Ensuring financial stability is helpful in such times.
- It allows you to write down your will while you are in a good state of mind.
- Nobody knows when they might get into an accident or suffer from a disease that takes their mental capacity away.
- It protects your family members from litigation in the future. It clarifies how you want your assets to be distributed so that your family members do not fight in probate court over the assets.
- Create a state plan with experienced professionals in order to avoid the publicity that can cause hardships after the passing of a loved one.
- It allows you to transfer assets free from estate tax and costs.
- You can support your favorite charity and consider buying digital assets.
What are the six basic steps of estate planning?
As life passes by, you are most likely to accumulate some sort of wealth and assets and family treasures. You might wonder what will happen to these assets once you pass away or become incapacitated. This is where estate planning comes in.
An estate planning purpose allows you to write down your will, set beneficiaries, and appoint an executor. A well-made estate plan can avoid disputes among your family members and keep your family affairs private.
When you are ready to create an estate plan, you should get In touch with an experienced attorney to help you write an estate plan. Here are some of the key steps that should not be missed as you go through the estate planning procedure.
1. Create an inventory of all your assets
Create a comprehensive list of all the things you own and owe. You should also include the contact information, names, and account numbers of your important advisors.
Keep the summary of your assets in a safe and secure place, along with all important documents. Make sure you have a soft copy of this information in a secure location.
2. Create a contingency plan
An estate plan gives you the ability to say how you want your property and assets to be distributed if you pass away.
It also puts a plan in place in case you become incapacitated so that your family can carry out your wishes without having to go to court.
The estate plan covers a plan on how to provide for your loved ones if you become disabled and are unable to earn income and cover all the expenses of your loved one.
3. Provide for your family and dependents
The primary aim of most estate plans is to protect and provide for your loved ones and dependents once you pass away. Your estate plan should include details about how your children will be taken care of after you die.
Such as the name of the guardian for children under the age of 18 years and those from a previous marriage. It also addresses how relatives and children with special needs will be taken care of in order to avoid jeopardizing eligibility for benefits.
4. Protects your assets
A key purpose of estate planning is to protect your assets for your beneficiaries and heirs by minimizing expenses and covering taxes.
If required, your estate plan should also specify strategies for transferring unique assets like a family treasure or family-owned business, investment property or real estate, or stocks. The majority of people apply for permanent life insurance and trusts to protect their assets.
5. Document all your wishes
An estate plan allows you to have your assets distributed according to your wishes. An estate plan is a legal document that is followed if you pass away or become incapacitated.
Distributing your assets involved naming beneficiaries for your life insurance policies and retirement accounts and naming beneficiaries for your other assets. It also allows you to ensure titles for material assets such as property, automobiles, and other property.
An attorney can help you write down a will and have it updated every few years to ensure your assets are distributed correctly and your end-of-life wishes are met when you pass away without any disputes among your family members.
6. Appoint fiduciaries
In order to have your estate plan executed properly, you need to assign fiduciaries. A fiduciary can be an executor who is responsible for taking action on your behalf if you become incapacitated or pass away, a trustee for your assets, a legal guardian for your dependents, or a power of attorney.
You need to take your fiduciaries in the loop and make sure they are aware of and agree to your wishes.
They should know where to find your original legal estate planning documents once you pass away. Fiduciaries can be anyone you trust, friends, family members, or a professional such as an attorney or bankers.
In a nutshell
Whether you have just started to accumulate wealth or have had generational wealth, an updated estate plan is crucial as it helps you minimize the impact of expected death, disability, and other events on you and your loved ones by protecting your assets and granting financial stability.
A financial advisor or attorney can help you create a solid financial security estate plan that will meet all your wishes and goals.
When creating an estate plan, make sure you keep in mind the above-mentioned six points, as they are important elements that make up an estate plan.
Lack of any one of them can create problems for your loved one in the future, which they will have to endure along with mourning your death.