Estate Planning Basics

Estate planning is a fairly daunting task, which is why so many people don’t tackle it at all. In fact, estate planning is one of the number one financial tasks that people put on the back burner. This is true for several reasons:

  1. It’s uncomfortable to think about our own mortality.
  2. Nobody wants to imagine a scenario where they’re physically unable to make decisions for themselves after a tragedy or accident.
  3. It can be upsetting to try and figure out how to care for your spouse, partner, kids, pets, and assets if you haven’t considered it before.

Luckily, estate planning doesn’t have to be as complicated as you might think! Estate planning is not just for the old and wealthy.  Privacy laws make it very difficult for family members to take care of loved ones if the worst should happen. You can get a relatively solid estate plan in place in a few hours or less by following these steps.

Create (Or Update) Your Will

If you don’t have a will already, it’s time to create one!   If your financial situation is relatively straightforward, you might be able to put one together using a site like LegalZoom. However, if you have a significant number of assets, you might be better served by reaching out to an estate planning attorney to create a will that covers all of your bases.

Select Beneficiaries

One simple estate planning update is to check your beneficiaries on every account. Whether you have a retirement account through your workplace, a life insurance policy, or even basic cash savings accounts set up, you should make sure your beneficiaries are correct. Too often, people leave an old beneficiary designation on their accounts without realizing it. This can either send your funds to someone you don’t want to receive them if you pass away (like an ex-spouse), or send your assets into probate while the courts work to divvy things up among the beneficiaries named in your will. Probate can be an expensive and lengthy process, so avoiding it should be your #1 estate planning priority.

Power of Attorney

Your general power of attorney is in charge of your estate, and you can also designate someone to be in charge of your health-related decisions if you can’t make them on your own anymore. Both of these roles are critical, and it’s important to fill them with people you can trust. Typically, people select their adult children, a sibling, or a close family friend to help them carry out whatever wishes they may have for their estate and their own personal health after an accident.

Think Through the Worst-Case Scenario

Creating an estate plan for what happens after you pass away is relatively straightforward. But what happens if you’re in an accident and are unable to make your own decisions - but still have several years of life ahead of you? Your estate plan truly needs to cover all of your bases, including the unthinkable. You need to have future decisions about the treatment you receive on file in the form of a health directive, and you need to know who is going to help make financial decisions for you if you don’t have the clarity to do so on your own. Giving up this control can be challenging, which is why it’s important to think of these worst-case-scenarios before they actually occur.

Talk to a Pro

Although many people set up their will through an online service, it pays to speak with professionals about your estate plan. Contacting a financial planner and an estate planning attorney to help you create an estate plan that protects your assets, your physical wellbeing, and your values is critical no matter what season of life you’re in. If you need an estate planning attorney recommendation, we encourage you to reach out to us. We’d be happy to connect you with professionals we trust!

Wood Smith Advisors, a woman-owned Registered Investment Advisor (RIA), is a fee-only financial services firm that partners with its clients to simplify their financial lives. We focus on women, entrepreneurs and individuals with complex financial situations, providing objective and competent advice, education and services to help them develop and build their businesses and reach their financial goals. We can be reached by clicking here.

"Finance Made Simple" blog posts are intended for educational purposes and not for specific advice. Each person’s situation is different. Consult your financial advisor for advice relating to topics discussed.

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