If you have finally decided to create your estate plan, congratulations! A well thought out and properly drafted estate plan is an incredibly valuable gift you give to yourself and to your loved ones. Getting started on your plan can also be an intimidating prospect. To make the entire experience a little less intimidating, the Grand Forks attorneys at German Law discuss some common steps involved in building an estate plan.
Estate Plan Steps for the Beginner
It may (or may not) come as a surprise to learn that over half of all Americans do not have an estate plan in place despite acknowledging the importance of having a plan. If you have finally decided to stop procrastinating and start building your estate plan, the following steps may offer some valuable guidance:
- Take stock of your debts and assets. While you likely have a rough estimate of your net worth and your total debt, you need detailed information about both assets and debts when you create your estate plan. Make a list for both assets and debts and include helpful information such as a description, location, account numbers, current value or amount owed, and attach copies of legal documents related to the asset or debt.
- Think about who you want to protect and provide for in your plan. Again, you may be able to make a quick list of important people such as a spouse or children, but spend some time thinking of all the people, entities, and even pets that have a place in your finished estate plan. This is also a good time to think about any specific bequests you want to make (such as family heirlooms) and how you want to divide your overall estate among your beneficiaries.
- Consider how you want to pass down assets. A Last Will and Testament will probably serve as the foundation of your estate plan; however, your Will is not always the best way to pass down an inheritance. Often a trust is a better choice, particularly if you have young children, special needs beneficiaries, or you want to retain control over how the inheritance you pass down is used by the beneficiaries.
- Contemplate your own incapacity. While death is inevitable and certainly should be planned for within your estate plan, you also stand a good chance of experiencing a temporary or permanent incapacity at some point. If you do become incapacitated, someone will need to make healthcare decisions for you and take over control of your finances. Think about who that person or people should be.
- Think long-term, including long-term care planning. It is never too early to plan for the likelihood that you (or a spouse) will need long-term care at some point. The high cost of that care should be sufficient incentive to include a long-term care planning component in your estate plan.
- Focus on avoiding probate. Formal probate is expensive and time-consuming. To avoid putting your surviving loved ones through the time and expense of formal probate, be sure to include probate avoidance tools and strategies in your estate plan.
- Limit exposure to gift and estate taxes. Always be cognizant of the devastating impact that federal gift and estate taxes could have on the value of the estate eventually passed down to loved ones. To ensure that your beneficiaries receive the entire value of the estate you leave behind, do what you can to avoid your estate’s exposure to taxes.
- Include a funeral planning component. Thinking about your own funeral and burial may not be particularly pleasant, but including a funeral planning component in your estate plan benefits you and your loved ones. It ensures that your wishes regarding your funeral and burial are honored and arranges to pay the expenses related to your death so your loved ones do not have to worry about it.
Are You Ready to Create Your Estate Plan?
Please join us for an upcoming FREE seminar. If you are ready to get started with your own estate plan steps, contact the Grand Forks estate planning attorneys at German Law by calling 701-738-0060 to schedule an appointment.
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