Estate planning doesn’t need to be complex to be effective, but it does involve a number of steps and an ongoing commitment to ensuring the plan remains effective. Let’s take a look at some of the basic steps in the process. The first step in the process, of course, is to find a qualified estate planning attorney with whom you can relate. On this blog, we emphasize working with a flesh-and-blood attorney over the do-it-yourself approach, which can result in a less than effective estate plan.
After finding the attorney, you’ll work to get the proper documents in place. For most people, this will include at least a will, a trust for minor children, an advance health care directive, and possibly a power of attorney designation. Once the documents are in place, it is important to ensure that assets are properly titled so that they can pass according to the wishes of the one doing the planning. If the assets are not titled so as to allow them to pass according to one’s stated wishes, a probate battle could occur.
Beneficiary designations, which apply to life insurance policies, retirement plans, annuity contracts, and other accounts, are another important thing to keep an eye on in estate planning. Failure to keep them updated could lead to payouts that are not in accord with one’s wishes.
For those who incorporate revocable living trusts in their estate plan, it is important to properly fund them. Without doing so, the benefits of such trusts cannot be realized. Another important aspect of estate planning is tax planning. While many people are well aware of what is going on at the federal level, it is important to plan for taxes at the state level, so that beneficiaries don’t get hit harder than they have to.
These are just several suggestions for estate planning, and much more could be said, particularly when it comes to more complex planning strategies.
Source: LifeHealthPro, “10 steps for avoiding estate planning mistakes,” Ed McCarthy, June 6, 2013.