Giving your family the security they deserve is a priority for many adults. One way that you can help boost the security is to ensure that you have your estate plan in order. Contrary to what many people think, estate planning isn’t only for the elderly. Instead, anyone who is an adult needs to have their affairs in order so that life is less stressful for their loved ones when the time comes to use the plan.
Creating your estate plan isn’t a process that is always easy, but the effort you have to put into it is worth it. Let’s take a look at some of the common estate planning components you need to consider and ways that you can avoid some common mistakes.
Your assets
A major component of your estate plan has to do with asset distribution. Where are your assets going when you pass away and how will they get there? You can use a will and trusts to outline who gets what. As you think about how to get these things to your loved ones, you need to consider the tax implications of the options.
You should remember that some assets, including life insurance policies and bank accounts, aren’t governed by the will and trusts. Instead, these financial accounts are handled according to the instructions in the payable upon death designation section of the documents related to the account.
Your health care
Not only does your estate plan address your assets after your death, it also includes end-of-life care. If you become incapacitated, your living will and durable powers of attorney can come into the picture. The living will outlines the type of medical care you want. The durable powers of attorney accomplish two things. One of these documents, the durable power of attorney for health care, sets up a person who will make medical decisions for you. The other document, the durable power of attorney for finances, sets up a person who will care for your financial affairs if you are incapacitated.
Special considerations
You can also write a letter of instruction for your loved ones. While this isn’t a legally binding document, it provides other information that you think might help your loved ones when you aren’t there to provide it. You should also make sure that you leave a list with online account information like websites, passwords and usernames. This can help them ensure that all of your accounts are handled appropriately when you are gone.