You have worked very hard to acquire the cars, estate, pensions, life insurance and other assets you have today. But have you listed those who will benefit from them when you are dead or incapacitated? You need to plan your estate and know who should get your wealth if you don't want the wrong hands to get it. Estate planning doesn't only help you know who will inherit your estate but also to what extent. Transfer of assets involves taxes, and they complicate the process if you don't plan the estate well. So what steps are involved when planning an estate?
Consider Your Family and Financial Needs
You need to create a good estate plan, no matter the financial reasons behind the decision. Does the value of your estate violate the estate tax limits in your area in any way? Most people avoid probate when planning their estate since the process is time-consuming and expensive. An estate plan helps you know who will manage your property and assets to avoid unnecessary financial hiccups. You need someone to manage your large inheritance and retirement assets when you get incapacitated. Consider the needs of your family to know how to approach your estate plan. Get a plan that suits your situation, whether you are single or if you have a blended family or minor children.
Look for an Estate Planning Attorney
Estate planning is a complex process, and any slight mistake would cause a huge loss. Some of the decisions you have to make are overwhelming, and only an experienced attorney in estate planning will help you out. One missing or wrong word can invalidate your revocable living trust, testament or will. Don't sign any estate planning document before the estate attorney permits you to ensure that all formalities are intact. The attorney prepares health care directives and power of attorney and ensures you have someone to manage your affairs if you become mentally incapacitated.
Know Your Net Worth
You won't create a good estate plan if you don't outline your net worth. List your assets and identify their value to understand your net worth. Most people use estimated value when calculating their net worth. Although you should use your investment and bank accounts to get your net worth, you should also include personal property such as boats, cars, collectibles, mineral and oil rights, business interests, retirement plans and jewellery. Then get the total of your liabilities and subtract it from the sum of your assets. Mortgages, personal loans and credit card debt are some of the liabilities you shouldn't ignore when calculating your net worth.
You should also find out if you need a revocable living trust or will when planning your estate. Your estate plan should explain what would happen if you are mentally incapacitated or dead. Then review your estate plan and update it when necessary. With such ideas in your mind, you won't go wrong when estate planning.