Surveys by AARP, CNBC, and Gallup show that most people in the United States haven’t created estate planning documents. In 2020, more than two-thirds of Americans had not written their wills to indicate who should inherit what from their assets. Estate planning isn’t difficult when you know how to make an inheritance document properly. You just have to know certain things before you pass over.
Easy steps to create estate planning docs
What happens when you die without writing a will? Dying without a will is called dying intestate. This means there aren’t official documents explaining how you would have distributed your assets among inheritors or excluded anyone. So, your inheritors have to go through a process called probate. The court will put a person in charge of determining your inheritors.
However, estate planning isn’t limited to creating the will either since several other documents are involved in this process. We have discussed certain things you should do to avoid creating problems for your heirs. Let’s start counting these things you should do before you pass over:
- Count your assets
Settling a person’s estate begins with counting that person’s assets. Hence, you should also start the estate settlement process by itemizing your inventory. List all valuables at home and in other places. All antiques, vehicles, and electronics must be itemized if you wish to create estate planning docs for posterity. This process may take some time, so don’t rush it.
- Draft a will
Remember that anyone aged 18+ should have a will to describe how they want their assets to be distributed after they have passed over. Therefore, you may contact professional estate planners to create a will. It’s not costly even to create a will, and lawyers may do it for less than $1,000! So, start with making a will now.
- Appoint the executor
You can appoint an executor of your choice. This executor will ensure that your wishes are respected after your demise. This person implements your will honestly. Thus, carefully choose a reliable person who can do this job without ill will.
- Determine your attorney
Give someone a power of attorney to make decisions on your behalf when you become unable to make them by yourself. For instance, if somehow you become incapacitated due to dementia, this attorney shall manage your legal affairs. So, you can prevent an unreliable person from messing around with your money if you become too unwell.
- Secure digital assets
Your social media accounts, stocks, and digital currency are your digital assets; you should lay down guidelines about what to do with them after you expire. Surveys show that 90% of Americans aged 15+ are using email now. More than two-thirds of them have ever used Facebook. So, pass your login info to the person with your financial power of attorney. They can deal with these assets later, just as you want.
- Assign your beneficiaries
Who shall inherit your assets after your death? Your estate planning documents must contain names, thereby identifying your true heirs. If you die intestate, the court will nominate your immediate successors as your legal beneficiaries. Creating a will allows you to include/exclude people based on your preferences. Review these names after an important life event, too, i.e., divorce or marriage.
- Review retirement accounts
Remember that retirement accounts take precedence over other assets, i.e., they are quickly passed down to designated individuals. So, you should procure a list of all the beneficiaries listed on your accounts to update them if you want. Thus, now you can ensure that these beneficiaries are current and exclude undesirable people.
- Create a trust
Besides a will, you should also create a living trust. A trust doesn’t go through probate and is set up during your life. A trust can keep your wishes about the distribution of your assets away from public viewing. Create a revocable living trust and make a person the trustee. That’s how you can secure the future of your inheritors properly.
- Discuss funeral expenses
Don’t forget about funeral planning to ensure your body is treated according to your wish after your demise. It’s believed that one-third of Americans have discussed funeral plans or written about them before dying. Planning your funeral enables you to have your religious beliefs respected. Thus, the executor will prevent anyone, with legal force, from violating these wishes after you’ve passed on.
- Lay down AHCDs
An advance health directive (AHCD) dictates how medical decisions about your health shall be made if you cannot make them on your own. So, you can designate a medical power of attorney to ensure your wishes are respected if you’re too unwell to communicate them. This person will make important health-related decisions, such as end-of-life requests, on your behalf.
- Describe your debts
Debt is not forgotten after your demise. You must mention your debts before passing so your inheritors can pay them back properly. Your debts must be cleared before your assets can be divided among your heirs. So, facilitate your heirs by making a list of everyone who has a claim on some parts of your assets.
- Detail charitable contributions
You can also decide to donate some portion of your wealth to a charitable organization. Remember that these donations have some tax-related deductions because these contributions are being made for a charitable cause. Making these donations will allow you to continue contributing to a cause you’re supporting. Hence, even after your death, this cause can go on without interruption.
Conclusion
Estate planning secures your descendants’ future. However, almost 50% of Americans aged 55+ haven’t created a Will yet. We’ve attempted to explain the basics of estate planning here to help the elderly. First, create your will and then draft a living trust as well. Nominate your executor, beneficiaries, and an attorney. Review your retirement accounts and update your estate planning documents too. Discuss the funeral in advance with your heirs while describing your debts before you pass over. Don’t forget to detail some charitable contributions. Secure your digital assets to be managed according to your wish after your demise. That’s how you can make prepare for your demise and make things easier on heirs.