Estate Planning: Know the Basics

When beginning your estate plan, your first task will be to inventory what you own. You may be surprised by all the tangible and intangible assets you have. Estimate some values, but obtain an appraisal on your home and statements from financial accounts.

You will then need to work with a lawyer to prepare a will. A will names an executor to manage your estate after you pass. You can paint your will in broad strokes or be as detailed as you like, naming specific inheritors for certain assets. Think about naming a guardian for your children, and documenting your wishes for your children’s care. A will can help if you’ve got a relatively straightforward estate plan, or it may be a good starting point.

Consider a trust

A living trust at its most basic is a legally binding document that designates someone to manage your financial assets and establish beneficiaries, and it can work in conjunction with a will to make your assets are properly handled after you’re gone.

You will want to hire lawyers with knowledge of state laws to draft your trust documents. A trust can act as a will substitute, although you may still need a document called a pour-over will to transfer assets into the trust on your death.

You can select trustees whom you give the power to act on property. If the trust is revocable, you can retain the right to revoke it and alter trustees. Because living trusts aren’t part of the public record, they make it more difficult to challenge your estate. A living trust lets you choose a representative to take over if you’re unable to manage your financial affairs.

Take stock of other accounts

Your investment accounts, such as IRAs and transfer on death accounts, let you name beneficiaries. You set up primary beneficiaries and secondary ones, who may receive portions of the account if primary beneficiaries are unable to or disclaim their share.

If you’ve invested with a partner in joint investment accounts, there are nuances to consider. In a joint tenants with right of survivorship account, the survivor takes full asset ownership. In a tenants in common account, each of you has a set percentage of ownership. When one owner passes, the deceased’s share passes to beneficiaries.

Other key documents

Also consider a health care proxy, which empowers someone you trust to make health decisions for you when you can’t. And a durable financial power of attorney allows someone else to manage your financial affairs. Your designated agent can act on your behalf, including paying bills and taxes, as well as accessing and managing assets.

Of course, all this is just the beginning. There are more rules and considerations. Also, life changes and your estate plan should change with it. Laws and regulations change as well, and those changes may affect your situation. Plan your estate while you’re sound and capable. It’s better than waiting and having no say in how your estate is handled. Planning today ensures your tomorrow is what you envision it to be.

Reach out to Roz Carothers and her team at Triplett & Carothers to learn more.