ESTATE PLANNING might sound like a daunting undertaking—and it can be for some families, such as those with great wealth or who have children with special needs. But for most folks, it isn’t all that complicated.
What’s involved? First, make sure you have the right beneficiaries listed on your retirement accounts and life insurance. For everyday Americans, their retirement accounts are often their most valuable asset, so it’s crucial that they have the correct beneficiaries named.
Second, think about the assets you own jointly with right of survivorship. This might include your home, car and bank account. Do you want these assets to pass directly to the other owner when you die? If not, you should look into changing how the assets involved are titled.
Third, get a will drawn up. Your will determines what happens to most of your other assets—those without beneficiaries named and those that aren’t owned jointly with right of survivorship.
For extra credit, consider a handful of additional steps. Write a letter of last instruction. Think of it as a roadmap to your estate, detailing what you own, where key papers can be found and other crucial information. You might also use the letter to specify who should receive your personal effects—an issue that might trigger heated arguments after your death.
In addition, talk to a lawyer about drawing up a financial power of attorney. That will allow someone to make financial decisions on your behalf, should you become incapacitated. Similarly, you might get a health care power of attorney, so a friend or family member can make medical decisions for you, assuming you can’t.
Finally, organize your financial affairs. Would settling your estate be a nightmare for your heirs? Maybe you should deal with the mess yourself, rather than bequeathing it to your family.
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