Estate planning is the process of deciding who will handle your responsibilities and receive your assets once you’ve either passed on or become incapable of making those decisions for yourself. Everyone should have these plans in place in order to make things easier for their loved ones at a time when they’re bound to feel overwhelmed.
You may have specific items to pass on such as a significant piece of jewelry or art. But before you do that, you need to address the basics.
Estate planning steps
There are five fundamental elements to estate planning that everyone should consider.
- Write your will. This is where you will name an executor or person who will make sure that your wishes are carried out.
- Establish a trust(s). The two most common types of trusts are as follows:
- Revocable trusts allow you to maintain control of your assets and make changes at any time.
- Irrevocable trusts are not able to be changed once they are set up, unless you have your beneficiaries’ signatures. The good thing about an irrevocable trust is that it is not subject to estate taxation.
- Power of Attorney should be assigned to the person whom you wish to make decisions for you, should you become too ill to make them yourself.
- A living will is a document that contains your instructions should you become incapacitated or too ill to make decisions for yourself. Your power of attorney will be the one to oversee your living will.
- Designate your beneficiary(s). This is the person who will receive certain assets and funds from your estate.
By following these steps now, you are ensuring that your estate will be handled according to your wishes when you pass. Make sure you are aware of your legal rights as you make your plans.
