Is your will up to date? It’s easy to forget about your estate plan once you’ve made your will, but the truth is that it’s essential to update your end-of-life documents regularly. Family relationships, financial assets, and your own priorities can all change over time, so you need to regularly review your estate plan to make sure it’s still relevant and in line with your wishes.
What Does an Estate Plan Include?
A will is probably the most well-known element of an estate plan, but it’s not the only important document.
Here are some crucial documents to include in your estate plan:
- Will: allows you to dictate how you want your property to be divided and to name a guardian for minor children
- Trust: can reduce estate taxes and simplify the distribution of your assets by avoiding probate
- Beneficiary documents: allow you to name the recipient of assets that can pass outside of a will, such as insurance benefits and retirement accounts
- Durable power of attorney: allows you to name a trusted person to act on your behalf if you become physically or mentally unable to
- Letter of intent: gives an executor or beneficiary specific instructions, such as how you want your remains handled
- Healthcare power of attorney: gives an individual the legal authority to make healthcare decisions on your behalf if you are incapacitated
- Guardianship designation: allows you to name a guardian and backup guardian for your minor children (sometimes incorporated into a will)
An estate plan isn’t just for wealthy people. And it’s not just for older individuals. No matter how many assets you have or how old you are, estate planning allows you to decide how to distribute those assets to your heirs.
You can also bequeath money to charitable organizations and non-family members. You may want to work with a financial planner and an attorney to ensure that all of your documents are complete and meet the legal requirements in your state.
Clarify Your Instructions for People and Property
One of the most important aspects of your estate plan involves guardianship of your minor children. If there isn’t a named guardian, the state will decide who will raise your children. In some cases, children without designated guardians may end up in the state’s foster care system.
Make sure that you designate a guardian and backup guardian. It’s best to choose someone who is financially stable and shares your views and values. Talk to them beforehand to ensure they agree to this responsibility.
Your children aren’t the only members of your family to consider. If you are supporting your parents or other family members, make sure you provide for them in your will. That may mean setting aside funds for professional care or a place in an assisted living or nursing home.
Don’t forget about your pets! You can name a guardian for your pets in your will or in a letter of intent, depending on state rules. You can also leave money to cover your pet’s care and other expenses.
Note that you cannot leave money or property to your pet. If you want to set aside funds for your pet’s care, you can either set up a trust or bequeath money to the intended guardian of your pet in your will. A trust is a stronger legal arrangement that requires your pet’s guardian to use the funds to care for them.
Cover Every Financial Aspect
Your estate plan doesn’t just cover your liquid assets, like the money in your bank accounts. It’s should include instructions for all your financial assets: your home, other real estate holdings, vehicles, investment accounts, jewelry, artwork, and even your digital assets. Your estate’s assets will be used to cover any debts you have, and they may also be subject to state and federal taxes.
If you are leaving assets to minor children, you may want to create a trust. This is a way to safely store the money and then give your children access to it when they are old enough. You can decide when and how to release the assets in a trust. You can also use a trust to set aside money for a child’s college education.
Set a Reminder to Review Every Few Years
Once you have an initial set of estate plans, you should review them every five years (at the longest). Over time, your goals and priorities may shift, so it’s important to have the chance to update your estate plan to ensure it aligns with your current values.
You may also want to make updates between those scheduled reviews, especially if something changes in your family structure. For example, if you have a new child or grandchild, you must ensure your will reflects that. Likewise, if other members of your family fall out or pass away, you may want to change your distribution instructions.
Building a Comprehensive Estate Plan That Reflects Your Wishes
It’s not necessarily fun to think about your estate plan, but it’s essential to make sure you and your family are covered if the unexpected happens. Without a detailed estate plan, you can’t know for certain what will happen with your children, pets, and financial assets. A will is a great place to start. Then, consider adding power of attorney forms and any other specific instructions that are important to you. Finally, make sure all that paperwork is signed according to your state’s laws and stored in a secure location.
There are many financial aspects to consider when you’re making your estate plan. It’s more than just deciding who will get your home and liquid assets. Make sure you think about other assets (and liabilities), and consider setting up a trust for any minor children. If you aren’t sure where to start, we can help.
At Guiding Wealth, we help clients of all ages prepare for the unknown with comprehensive estate plans. Our team of Certified Financial Planner™ professionals will listen to your goals and help you develop a complete estate plan that matches your priorities. To get started, schedule a consultation online or call us at 214-810-3835.