Estate planning should not frighten you into inaction.
You have heard that you need an estate plan.
What does this mean?
It sounds intimidating.
According to a recent Brainerd Dispatch article titled“Navigating your estate plan,” breaking an estate plan into manageable sections makes it less intimidating.
What are the main parts?
Certain assets pass directly through beneficiary designations on the account or policy.
These include 401(k)s, 403(b)s, IRAs, and life insurance policies.
Whoever is listed on the account will receive the asset.
What if you name a different person in your last will and testament?
The beneficiary designation trumps the last will.
What if you do not have a beneficiary listed?
Your assets could be subject to probate otherwise avoided.
As your life changes, you should review these periodically especially after major life changes.
A last will and testament is foundational to estate planning.
This document saves time in probate and can save you money in legal fees, too.
If you have minor children it is even more important.
Guardians are designated in your last will.
Without doing so, you will have no choice regarding who rears (I know a lot of folks prefer "raises" here, but I am just not there) your minor children if orphaned.
What happens if you die without a last will?
The courts will determine what happens to your assets and your children according to the laws of your state.
Chances are you do not want this.
Directives and Powers of Attorney.
A last will takes care of your estate after you die and has absolutely no authority while you are not yet room temperature.
What happens if you first become incapacitated?
You will not be able to manage your finances or make health care decisions.
To prepare for this you should have your advance health care directives and your general durable powers of attorney (one for financial and another for health care decisions) signed, witnessed, and notarized.
What do these do?
These allow you to grant a designated agent authority to make decisions and manage your affairs on your behalf.
Not all estates need trusts.
If you have a more complicated estate, it may be helpful?
Trusts can help your loved one with special needs keep government benefits and have money for other needs.
You also can be used to avoid probate (i.e., a fully-funded revocable living trust) or minimize taxes.
Estate planning is best done with the help of an experienced estate planning attorney.
Find one near you and get started.
Reference: Brainerd Dispatch (August 11, 2019) “Navigating your estate plan”