Estate Planning Basics: Why It Is Important And How To Do It Right

 

 

As somber and melancholic as estate planning may get, it is still an essential task that must be done. Given the inevitability of death, planning ahead for when the time comes is essential. Several steps must be taken to sort everything out, one of which is estate planning. Estate planning is writing out what you want to happen to your belongings after you die. With children and a family, things differ because your belongings are divided amongst them. When you do estate planning, you write down who gets what, especially if you want a specific division in your assets. Read on below to find out why estate planning is important and how to do it right.

Why Is Estate Planning Important?

Estate planning is important for individuals who own several properties and family members to pass them down to. When you have the time and the resources, you need to get to it and in case you want to change it, you can make alterations whenever you want. However, postponing it for an unspecified time is a little risky because you, unfortunately, do not know when the time will come that you will pass, and you don’t want to wait until it’s too late. Having an estate plan helps you be sure that your loved ones will be taken care of when you pass away.

Be Sure to Include the Key Components of Estate Planning

There are five main components of estate planning. These are beneficiary designations, wills, living trusts, powers of attorney, and health care directives. Each one of these needs to be taken into consideration to finish estate planning successfully.

 

• Beneficiary Designations

 

Beneficiary designations are as straightforward as they get when it comes to estate planning. At some point in your lifetime, you most probably created a checking account and have enrolled in life insurance plans or other insurance policies. Beneficiary designations dictate who inherits the balance by asking the bank for a transfer.

 

• Wills

 

Many people confuse an estate plan with a will and use it interchangeably. However, a will fall under the elements of an estate plan. A will is a standard, and possibly one of the most important, documents in the planning process. It dictates a representative of your choosing to distribute your assets as you had intended. You can also decide who takes care of or becomes a guardian for minors and who takes charge of their custody.

 

• Living Trusts

 

Living trusts, or revocable trusts, are assets that are placed within a trust that you created (this could be your home, land, a factory, or other assets). The process of revocable trusts should be private and quick so that they are distributed to the intended person when you die.

 

• Power of Attorney

 

A durable power of attorney is someone you deem a trusted friend, a family member, or a possible advisor of whom you are sure can properly act on your behalf. This is important for when any issues arise after you die, seeing as they can take immediate action.

 

• Health Care Directives

 

A health care directive makes decisions on your behalf if you are on life support, for instance, or in any other medical situation that prevents you from making a sound decision. They can state whether or not you want to stay on life support, or the duration you should stay on it. You can also sign a DNR (Do Not Resuscitate) form to state that you do not want to be revived if your breathing stops or if your heart stops beating.

Consult a Lawyer

To get a hold of legalities properly without missing anything, you will most likely need to consult a lawyer who specializes in estate planning. A law firm’s website with listed possible attorneys for your case can help you choose the right person for the job. The firm’s site can also give you an idea about what the process will be like or how they will go about it.   

Consult Your Family

 

Consulting your family on a topic such as this one can be a very difficult step to take. They may not want to discuss your death, but since it must be done, do it delicately and at an appropriate time. This might cause some fights and arguments but you still might need their take on the matter, so bear with the conflicts until they subside.

 

When in doubt, always ask for help. This is no easy task to not only do but to even think of. Planning for your own demise can bring you down, so it’s always smart to have someone with you to help you out during that time. When you consult a lawyer, you will be able to get an unbiased opinion, which you will need when estate planning. This is an extremely personal thing to do, so you might need to consult someone close to you as well and get the aid of both a professional and a confidante.