Many people believe they’re too young to begin thinking about estate planning. Others say they don’t have significant enough assets to make the process of planning worthwhile.
However, the truth is that everyone needs estate planning. If you have any assets, and you intend to give those assets to a loved one, you need to have a plan.
Forbes’s article, “Reviewing Your Financial And Estate Planning Checklist,” examines some important topics in estate planning.
The first of topic is a durable power of attorney for property, finances and health care. This document allows you to designate a trusted individual to make decisions and take action on your behalf with matters relating to each of the three areas above.
In addition to the importance of having all powers of attorney readily available, in case you become incapable of making decisions, beneficiary designations should also be looked at frequently to update any changes to family situations, like a birth or adoption, death, marriage or divorce.
Another topic to address is a living trust. A trust will give direction regarding where and how the assets are dispersed when you die. A great reason to use a living trust is that the assets in a trust do not pass through probate court, which can be an expensive and time-consuming process.
Another area is digital assets. It’s critical for your heirs to have access to digital files, passwords, and documents. This can be easy to overlook. Create a list of your digital assets, including social media accounts, online banking accounts and home utilities you manage online. Include all email and communications accounts, shopping accounts, photo and video sharing accounts, video gaming accounts, online storage accounts, and websites and blogs that you manage. This list should be clear and updated for your heirs to access. You should also be very careful to ensure that your estate planning documents contain the required language for your executor to collect your digital assets if they are unable to access your accounts with your passwords.
If we fail to plan for these somewhat uncomfortable topics, the outcome will be stressful and expensive for our heirs.
Reference: Forbes (January 4, 2019) “Reviewing Your Financial And Estate Planning Checklist”