10 Steps To Build A Solid Estate Plan

10 Steps To Build A Solid Estate Plan

Every adult should have an estate plan. Although the process may sound daunting, it is easier to approach it as several small tasks. The solution is to use a step-by-step method, and these ten steps are essential for a solid plan.

1. Draft a will. The will is one of the most important documents. It should explain who inherits what, and the creator also names an executor. This is the person who is responsible for carrying out the terms of the will, meeting financial obligations and distributing assets appropriately. If there are minor children, name a guardian for them in the will.

2. Consider setting up one or more trusts. Trusts are valuable in planning for both life and death. For example, putting a house in a trust may protect it from judgments following a lawsuit in some cases. It also protects the property from probate if it is left to survivors after death. In planning for the care of survivors, a trust is also a useful instrument for responsibly distributing money. For example, a trustor may set up the trust to distribute enough money to pay tuition every term for a child who enrolls in college.

3. Use health care directives. When a person is unable to make medical decisions, it is important to have an appointed person to make them. People who wind up in a coma, with dementia or with a brain injury may not legally be able to make such decisions.

4. Set up a financial power of attorney. By using a durable power of attorney for financial purposes, a person can name another individual to handle finances in the event of mental incapacitation.

5. Protect inherited assets. If children will inherit money or property, it is important to name an adult who can manage the assets until the child reaches an approved age. In most cases, people appoint a designated guardian from the will.

6. File any necessary beneficiary forms. For retirement accounts and bank accounts, always name a beneficiary for the funds to be payable to upon death. This protects any remaining balance from probate proceedings. Be sure also to register bonds, stocks and other accounts to be transferred upon death.

7. Set up a life insurance policy. This is especially important for people who have dependents or spouses. A non-working spouse who stays at home to care for young children should also have a policy. Amounts may vary depending on how thoroughly a person wants to provide for survivors. A minimum amount to cover funeral expenses, debts and living costs for a few years is a good start.

8. Learn about estate taxes. Most estates will not owe federal taxes. If a person's net worth exceeds the current year's minimum, taxes will be imposed. To learn more about the current minimum, how taxes work and what exemptions exist for transfers, discuss concerns with an advisor.

9. Provide for funeral expenses. Most life insurance policies include a funeral benefit, which is available quickly to cover immediate funeral costs. Although most funeral homes push prepaid funeral plans, some are not reliable. Service and merchandise costs may inflate quicker than interest from a prepayment. Another option is to set up a funeral plan that includes specific wishes without making a payment. Set up a "payable upon death" fund at a bank, and leave instructions for using it for the beneficiary. Compare the balance to inflated funeral costs every five years, and make additional deposits as necessary. Make sure to communicate all final wishes regarding cremation, burial or organ donation with several family members.

10. Protect a business. Anyone who is the sole owner of a business should have a succession plan. Also, partners in businesses should set up buyout agreements.

Be sure to store all documents in a safe place. The executor of the estate should have a key or be able to access these documents when necessary. Financial certificates, insurance policies, wills, trusts, POA forms, property deeds, vital business documents and information about final wishes should be available to the responsible party. To learn more about estate planning, discuss concerns with an advisor.

Contact our life insurance advisor today to learn more about protecting your business.

Call  800-409-9790 or email us at [email protected].     

July 04, 2017
by Jeff Neuhalfen