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Planning Your Estate: 6 Things To Remember

Estate planning is a must for anyone who has a family or even a single loved ones who has to be looked after. One common misconception is that estate planning is only for those who are wealthy or have a large amount of assets to their name. Though not a pleasant topic, some basic estate planning is essential to ensure that your family is not faced with the hassle of court appearances and legal matters when you are no longer around. There are a few things that you should keep in mind while doing this.

1) Write a Will

Last Will and TestamentWriting a will is a pretty simple process and it is an essential component of an estate plan. This will help you put your affairs in order and ensure that all your loved ones attain what they are rightfully entitled to. There is no specific age or stage of life when you should consider drafting a will. A will can be changed any time you wish and appropriate modifications made. The need for such changes arise primarily when major life events take place such as a wedding or the birth of a child.

2) Appointing a Guardian

If you have any minor children, then appointing a guardian for them should take priority. This is because failure to name a guardian can result in the court appointing one and that might not be somebody who has the best interests of your children at heart. Or at least it might not be the person you would choose. The guardian does not have to be the same person you choose to manage personal finances. You can choose one person to handle your financial affairs (trustee) and another to be your children’s guardian. Just remember that managing your finances after you’re gone can cause friction so it is important to choose someone you trust who is also competent at financial matters. Both of these issues can be handled inside your will.

3) Consider Establishing a Trust

Setting up a trust can remove the burden of managing finances off the shoulders of your family members. The property and assets covered under the trust will be managed by an organization or an individual with experience in the field. The chief advantage of a trust is that there is no probate involved. The terms and conditions of a trust can be amended during your lifetime and trusts can be of two types—living or testamentary. A living trust is set up while you are alive and if set up properly can help protect assets from creditors in addition to having estate planning benefits. A Testamentary trust takes effect upon your passing and can help handle financial burdens for your heirs.

4) Assign Beneficiaries

There is no need for probate if you name beneficiaries for some of your assets. Life insurance policies, Bank accounts, Brokerage Accounts are all examples of such assets. You can set them up with either joint ownership (which has some risks of its own) or with beneficiary provisions. If you have set up a living trust, then the ownership of all assets should be placed into the trust immediately upon completion of the trust or else the trust is basically worthless. The Trust will then disburse them to the beneficiaries as per the conditions of the trust upon death of the grantor. Besides finances and material assets, you will have to consider bequeathing rights to your digital assets also. We live in a world where everything is now digital and there might be a lot of stuff online that you are sentimental about such as photos or websites that you have.

5) Signing a Health-care Directive

By signing a health-care directive when you are in possession of all your mental faculties, you can ensure you do not have to continue living once the quality of your life diminishes beyond a reasonable stage. Doing this will also spare your family the mental anguish of such a tough decision should it come to that. It is important to talk with your family beforehand so that they understand your wishes.

6) Seek & Acquire Professional Assistance

A lawyer is best qualified to offer you guidance and advice on how to go about and arrange your estate plan. A tax advisor’s inputs can also prove helpful in this process. A lawyer who has expertise in estate planning will be able to help you understand the implications of options such as appointing an executor for your will or a health care proxy, for instance. Los Angeles estate planning lawyer Nick Wajda explains that “often times, clients may be initially confused as to their estate planning strategies. This is especially true with more complex estates. It’s sensible to locate professional help that’s familiar with your jurisdiction.” Keeping these important tips in mind while estate planning will help you be better prepared and make more informed decisions. When it comes to planning an estate, there are some things that are better not left to chance.

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Image courtesy of Grant Cochrane / FreeDigitalPhotos.net

About Tim McMahon

Work by editor and author, Tim McMahon, has been featured in Bloomberg, CBS News, Wall Street Journal, Christian Science Monitor, Forbes, Washington Post, Drudge Report, The Atlantic, Business Insider, American Thinker, Lew Rockwell, Huffington Post, Rolling Stone, Oakland Press, Free Republic, Education World, Realty Trac, Reason, Coin News, and Council for Economic Education. Connect with Tim on Google+