Estate planning can seem daunting and overwhelming. It may even conjure up negative emotions for some. Perhaps that's why an estimated 64% of Americans don't have a will or any type of estate plan in place. Unfortunately, that means a majority of the population is at risk of leaving their families or business partners a great deal of work should anything happen to them. This includes seeking out documents, hiring lawyers and involving the court system to sort through all that is left behind.
While it may seem easier to neglect taking responsibility and let things fall through the cracks, estate planning is essential for everyone, regardless of your age, family ties or business situation. Putting a plan in place can ensure your assets are properly handled and family members are taken care of should something happen to you.
Below are my five recommendations on what you can do today to get your estate in order:
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Start Early
Many people are under the assumption that estate planning doesn't begin until later in life, perhaps close to retirement. The reality is that—similar to your overall financial plan—the process should begin during or near your 30s. Life is unpredictable, and having your plan in place earlier in life will not only ease your mind but the minds of those around you. Then, you can (and should) update things over the years, ensuring your assets are always accurately allocated.
Identify Key People
As you kick off the process, consider the people you'd like to include in your plan. This can range from key family members and friends to important business partners. This may be especially important if you are a small business owner and can fall into your succession planning. Once you identify your people, determine how the assets will be distributed between them, as well as who will be handling all the necessary paperwork. Also, ensure you check beneficiary designations on key accounts and documents, including retirement accounts, life insurance policies, etc.
Consider Qualifying Estate Items
When reviewing your portfolio, ensure you are taking every valuable item into consideration. These items can include real estate (your personal residence), entities (small businesses, corporations, LLCs, etc.), investment accounts and life insurance. Once you have taken a look at your entire estate, you can begin listing out these individual items and placing them into specific categories.
Be Specific
As your family will not be in the position to ask you questions, it's essential that your plan is accurate and as detailed as possible. This includes leaving your family or colleagues a list of online accounts and passwords, location of important documents and assets, as well as any potential contingencies for the receiving parties (i.e. can the item be sold, age restrictions, etc.).
Share Documents
Don't just stick your estate planning documents in a file cabinet and forget about them. Instead, provide copies to your trusted loved ones and professionals. If something were to happen to you, it's important that your documents are easily accessible to those who are closest to you. Along with copies of wills, trusts and beneficiary forms, you might also consider sharing a secured list of usernames and passwords with a family member or two that you trust. For enhanced security, consider using a password manager such as Dashlane or LastPass to store this information and share it with others as necessary.
While putting together an estate may not be a top priority for many, most people have an idea of how they'd like their assets allocated should something happen to them. The sooner you put a plan in place, the better. And, as is the case with any financial plan, an estate plan should be reviewed and updated, as needed based on life situations, including marriage, birth of a child, death of a spouse or new business venture.
See the original version of this article at www.definefinancial.com.
Taylor Schulte, CFP®, is founder and CEO of Define Financial, a San Diego-based fee-only firm. He is passionate about helping clients accumulate wealth and plan for retirement.
-
Eight Ways Retirees Can Have Fun Despite Rising PricesHigher prices are a bummer for everyone, but if you're a retiree or on a fixed income, how do you still have a good time without breaking the bank?
-
IRMAA Could Have Surprised This Retiree: What You Can LearnA financial adviser explains how a client could have unwittingly triggered the Medicare surcharge and what others need to know about it.
-
Eight Ways Retirees Can Have Fun Despite Rising Prices
Higher prices are a bummer for everyone, but if you're a retiree or on a fixed income, how do you still have a good time without breaking the bank?
-
IRMAA Could Have Surprised This Retiree: What You Can Learn From Her Experience
A financial adviser explains how a client could have unwittingly triggered the Medicare surcharge and what others need to know about it.
-
Social Security Strategies for High-Net-Worth PeoplePeople who don't 'need' their Social Security may consider using their benefits to manage estate taxes and long-term care expenses.
-
Have You Reviewed Your 401(k) Beneficiary Designations Lately?If you've had any life changes — marriage, divorce, a new baby or retirement — you might want to make sure your beneficiaries are in order.
-
How 401(k) Auto Portability Boosts Women's Retirement SavingsWomen already face an uphill battle when saving for retirement. Auto portability tech transfers their 401(k)s when they change jobs, which can add up over time.
-
Why Gray Divorce Happens and Five Ways to Avoid ItEmotional intelligence is a key ingredient in a relationship's long-term success, and it can be learned or strengthened at any age. A psychologist explains how.
-
Four Times DIY Investors Should Talk to a Financial AdviserWhile it's possible to manage investments without professional help, there are times when independent guidance from a professional may be invaluable.
-
Don't Veer Off Course at the First Sign of a Squall in the MarketsWhen markets go nuts and investor sentiment drops, you can keep your sanity by trusting in and sticking with your long-term plan.
