You’ve probably heard plenty of horror stories about Grandpa Harvey or Great Aunt Agnes dying broke and alone in hospitals surrounded by strangers.
While you can’t prevent every unfortunate event, here are some actionable tips to help you create an estate plan that better protects your assets.
Decide what happens when you die
Depending on your situation, you’ll likely have life insurance proceeds and/or retirement plan assets to share with your beneficiaries once you die. If you don’t have a will in place, you won’t be able to decide who gets what after you pass away.
Write your will
Wills are legal documents that outline exactly who inherits certain items and money, including cash, bank accounts, real property, cars, boats, antiques, artwork, collectibles, life insurance policies, annuities, pensions, retirement plans, investments, IRAs, and RRSPs.
Wills provide clear instructions on how your possessions will be distributed among your heirs. They also specify how each beneficiary will inherit different pieces of your estate, depending on how you have arranged things in your will.
It is a good idea to consult an estate planning lawyer when drafting your will to make sure you understand the laws regarding wills in your state and that you complete the proper forms.
Set up your trust
If you have any dependents, set up a trust so that your children are taken care of in the event of your passing.
You may want to consult an attorney to figure out which type of trust makes the most sense for your situation.
Choose your beneficiaries
This includes naming beneficiaries to inherit all of your assets as well as naming a guardian for any minor children in case something happens to you.
While it might be uncomfortable, it is a good idea to put real thought into this.
For instance, what assets do you want to leave to your spouse? What assets do you want to leave to children? Are there requirements that you want to put in place before dividing up monetary assets for your children? What, if anything, do you want to leave to charity? Are there any restrictions on transferring any assets?