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The idea of planning one’s estate can be overwhelming to say the very least. Most people can attest to not wanting to focus on the end of their own lives, which may play a role in why over half of Americans today do not have a will in place. Nevertheless, ignoring the estate planning process can do a great disservice to your family (or business, if you own one), and the longer you wait, the more difficult things can get.
Not sure where to start? Here are a few tips to get you moving in the right direction.
1. Start with a Will
There’s no getting around the fact that dying without a will is never a good idea. Why? The result is what’s called “dying intestate,” which is legal-speak for putting your family’s future in jeopardy. Even if you don’t have a family, the future of any property you own will be dictated by the state. More often than not, scenarios in which a person dies without a will don’t go nearly as well as the individual would’ve likely preferred, which is why it’s so important to not only write a will, but do so early-on in life.
You don’t even need to hire a lawyer to get a basic will into place, as there are plenty of online services that allow you to create a will for under $100. Otherwise, you’ll want to work with a reputable attorney to establish a will and trust.
2. Minimize Estate/Income Taxes
The last thing you want is for your beneficiaries to owe income and estate taxes on their inheritances, and fortunately, there are ways to minimize these—you just need to know what they are. One option is to leave your taxable assets to charities that are included on your list of beneficiaries, while leaving your tax-free assets to (life insurance, Roth retirement accounts etc.) to your family. Working with a good accountant is worth its weight in gold when it comes to minimizing estate taxes, so don’t hesitate to pick up the phone and call an expert.
3. Be Clear About Who Will Be Caring for Your Estate
One of the hardest things about planning an estate is coming to terms with the fact that you won’t always be around to care for it. Naming a successor who will care for your estate is a crucial part of the planning process, however, and you should take care in thinking deeply about who will be the right fit for the job. Many people think that their kids should be in charge of their estate, for example, but this isn’t always the smartest route to take. Nevertheless, leaving things ambiguous won’t do you any favors, so be extra clear in who will be caring for your estate once it comes time to handle the paperwork.
4. Don’t Keep Secrets
The reasons as to why can vary, but it’s not unheard of for people to be uncommunicative about roles they have assigned family members, colleagues or others in the estate planning process. This isn’t something that should be kept a secret, however, as no one wants to find out unexpectedly that they’ve been tasked with the responsibility of managing an estate or handling other tasks. If you’ve named someone in your will or trust, the earlier you can clarify this and explain to the person what their role will be, the easier you’ll make the transition process.
Planning your estate isn’t something that should just be skipped over. Start now, and take your time—it’s essential to make the right decisions and avoid rushing the process.