Setting up a Will

By Reagan Bonlie
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You may be wondering, “What is an estate plan and why do I need one?”

Most people are astonished to hear that estate planning involves more than writing a will. Lifelong preparation and legacy are the major concerns. In case of incapacity, you may desire to identify substitute financial and healthcare decision-makers. Lifetime planning for high-net-worth individuals may include tax-efficient gifting plans.

A testamentary plan details how your heirs or a charity will benefit from your estate after your death (e.g., outright vs. in trust). A testamentary plan can name an executor to handle your estate and a trustee to manage your trusts, as well as a guardian for your children. Finally, your testamentary plan will include tax planning if your estate is taxable.

Controlling these decisions is key. If you die without a will, your state’s laws will govern your estate. This may fail.

What documents are included?

Your specific situation will determine what estate plan paperwork needs to be developed and signed. If you own a firm, succession planning may require more intricate arrangements.

Basic estate planning documents include:

  • Will/Revocable Trust
  • Financial Power of Attorney
  • Legal Documents Such As A Power Of Attorney For Healthcare And A Last Will And Testament
  • Forms for naming a beneficiary on a retirement account, life insurance policy, or 401(k)
  • Title deeds and related paperwork
  • Settled estates that you established and endowed while alive (e.g., Irrevocable Life Insurance Trust)

If you own assets jointly with rights of survivorship (e.g., real estate or brokerage accounts), they transfer outright to the surviving owner by operation of law, not your Will. Your Will doesn’t affect retirement benefits or life insurance proceeds. Any assets not passed by law or beneficiary designation will usually pass according to your Will.

How will I plan my estate?

Some essential questions to consider when creating or revising your plan:

  • Who should decide my health and financial decisions if I get sick?
  • Who should be executor, trustee, or guardian?
  • Who should inherit my estate?
  • Who gets my assets if the principal beneficiary dies before me?
  • Should my assets go to trusts for individuals rather than outright?
  • Will my estate plan include charity giving?

How to create or change it?

Most estate planning documents require a trained estate planning attorney. Friends, family, and trusted experts like your financial advisor or accountant can recommend an attorney. After finding an estate planning attorney, get copies of your current paperwork and ponder the following questions before your first consultation.

Finally, having an estate plan is crucial, but it must be updated constantly to reflect your intentions. If your or a loved one’s circumstances change, review your estate plan. Marriage, divorce, birth, death, financial or health changes, and migrating to another state are examples. Even if nothing has changed in your life, review your plan every three to five years to make sure it still matches your wishes and current law.