6 Simple Steps to Effective Estate Planning
Organizing the specifics of your estate is never a pleasurable task, but it is unavoidable. If you don't have a proper will and anything bad happens to you, your assets may not be split as you would prefer. As a result, your loved ones may suffer even more as a result. You can rest easy knowing that if you have your end-of-life affairs in order, your friends and family won't have to negotiate things on their own terms if you die away unexpectedly. And, perhaps, once you've nailed down the details, you won't have to think about it for years.
Are you feeling overwhelmed and unsure where to begin? Simply follow this basic guide.
Step 1: Take a look at your assets.
Before you make any decisions about your estate, you need first understand what it comprises. Make a thorough inventory of all your assets—that is, everything you own that can be transformed into cash. This includes real estate, vehicles, and stock ownership, among other things. You may start making smart selections about how to divide up your entire estate after you know how much money you're worth.
Step 2: Make a list of everything.
Make a formal last will and testament that includes all of the specifics of your estate as well as any beneficiaries you choose to identify. Designate an executor, someone you appoint to take care of your affairs while you are away.
Step 3: Assign a medical power of attorney to someone.
Choose someone to make health-care decisions for you if you are unable to do so due to an accident. This is someone you should put your life in the hands of.
Step 4: Appoint a person to act as your financial power of attorney.
You'll need a financial power of attorney in the same way that you'll need a medical power of attorney. If a doctor finds you incompetent to sign financial paperwork, this should be someone you trust.
Step 5: Make a list of recipients.
This isn't the same as your will. In the case of your death, your assets will be split among the persons on your list of beneficiaries as you see fit. Make sure this is up to date, as it can change over time.
Step 6: Invest in a solid life insurance policy.
If you have children or other loved ones who you would like to be cared for while you are gone, consider purchasing a life insurance policy that will cover them. To figure out how much coverage you'll need, combine all of your bills, loans, and other expenses together, then divide by 5%. The outcome is the amount of money your family would require to live comfortably.