Estates and estate planning tend to be associated with the dramas unfolding in wealthy families, such as in the movie Knives Out or the hit HBO show Succession.
But everyone has an estate- it just means all the things you own!
Although it’s a hard topic to think about, estate planning requires you to acknowledge that at some point you will die.
That’s hard, but it’s best to have your estate thoroughly planned to help your family and loved ones avoid probate.
Probate is the court process of distributing your assets and settling any outstanding debt. It can be a long, tedious process. If you thoroughly plan your estate, your assets may pass more quickly into the ownership of your family, making the grieving process smoother.
Once you decide to plan your estate, congrats! You’re doing something that will protect your loved ones even after you pass on. Next, you have to figure out how to plan this estate.
Step one, account payable upon death.
Making a bank account payable upon death the first step to ensure smooth sailing for your family. Investopedia explains, “Payable on death (POD) is an arrangement between a bank or credit union and a client that designates beneficiaries to receive all of the client’s assets.” Making an account POD helps your beneficiaries to access the money without going through probate.
In order to do this, all you need to do is fill out a form through your bank. Then, when your beneficiary goes to access the money in the account, they just need to show their identification and your death certificate. This is a straightforward process and can help your loved ones financially.
Step two, pick beneficiaries for your retirement accounts and insurance policies
You’ll want to ensure that the beneficiaries listed on your accounts and insurances are up to date. Often, people designate spouses as beneficiaries on these accounts. But what happens if you go through a divorce? You should make sure that the money from your insurance is going to the right person, because who you designate as a beneficiary will override what your will says.
Making your wishes and intentions with money clear will minimize conflict between your loved ones after you pass. Protecting your family financially after your death is an act of love.
Step three, create an advance directive
Unfortunately, sometimes we are unable to advocate for our own medical treatment. If this happens, an advance directive will put your health care choices in the hands of someone you trust. These documents outline the treatment you want, and who is allowed to make decisions about your medical treatment in the event you cannot.
The types of documents that are considered an advance directive include a living will, medical power of attorney/ health care proxy, Do Not Resuscitate Order, and your consent to organ or tissue donation.
The AARP has a great database of every advance directive form, broken down by state. These types of orders are serious decisions, but it can also be a sign of how much you trust the people in your life. It is important to designate a health care proxy, and prepare them with advance notice.
Step four, online resources for a last will and testament
A last will and testament is the most well-known piece of estate planning. It is worth it to write a will with an attorney, especially if you have minor children who will need a strictly designated care plan, or an estate with numerous assets. But, if you have a simple estate, there are some options for writing a will online.
Some options for online wills are: Law Depot (free), LegalZoom ($89-179), Total Legal ($19.95). It is a good idea to explore your options so you can make an informed decision about what will help your loved ones the most after you are gone.
Step five, let your family members know about your plans for your last wishes
Communicating your last wishes is the final step in having a strong estate plan. Although you can include these wishes in your will, the will reading often happens long after a funeral.
Expressing your wishes ahead of time will help everyone think more clearly during a difficult time. Having this conversation will give your family peace of mind to know that they are following your wishes exactly.
The takeaway:
Even though these types of arrangements can seem morbid to think about, dealing with them now will help yourself and your family in the long run. By addressing issues such as your beneficiaries, power of attorney, and final arrangements, you help relieve a lot of potential stress.
Estate planning is essential to figure out, even if you think you don’t have much to your name. The benefits of a fully planned estate are big, they can help stop any conflict between family. Planning your estate also shows your loved ones that you trust them and will continue to care for them, long after you are gone.
To learn more about estate planning, read this article.
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