Do you own a home, car, treasured jewelry or even a great baseball card collection? You may want to consider creating an estate plan if you own anything of financial or emotional value.
We found guidance and resources from NOLO LAW for ALL to help you create a simple estate plan to protect your assets.
Estate planning isn’t just for the wealthy. Estate planning means deciding how you want your assets distributed after you pass away or become unable to make decisions. Financial assets include savings, stocks, bonds, insurance or property. Emotional assets include valuable personal collections or heirlooms.
An estate plan allows you to choose whom to leave your assets and helps ensure that those assets aren’t reduced or liquidated to pay estate taxes. You’ll also have peace of mind knowing that your financial matters are settled. If you don’t have a basic estate plan or name a trusted guardian to oversee your estate, your assets must be distributed using a costly, complex legal process called probate court.
A simple estate plan includes the following steps:
1. Draft a will
Name a guardian to care for minor children and beneficiaries to whom you want to leave your assets
2. Create a trust
A trust includes your instructions for how to “hold” your assets for your beneficiaries. If held in a living trust, your assets can go directly to your beneficiaries after you pass away, eliminating the need for probate court.
3. Complete an Advance Directive (AD) or living will
These legal documents provide your directions for the kind of medical treatment you want and give legal authority to the person you appoint to make your medical decisions if you become unable
4. Complete a financial power of attorney (FPO)
A Fiduciary or FPO gives legal authority to the person you appoint to act on your financial matters if you become unable
5. Protect your children’s assets
Name a trusted adult to manage your minor children’s inherited assets
6. File beneficiary forms
Avoid the probate process by registering your financial assets to automatically transfer to your beneficiaries upon your death
7. Consider insurance
Decide whether obtaining health, life, or prepaid funeral insurance is right for you or your family
8. Understand estate taxes
Your heirs can avoid most federal estate taxes if the value of your estate is under a specific dollar amount.
9. Prepay your funeral
You can set up a payable-on-death account to pay for your funeral and other expenses upon your death
10. Make final arrangements
Consider funeral service option preferences so your loved ones will understand your final wishes
11. Protect your business
Determine a succession plan if you’re the sole owner of a business, or have a buyout agreement in place if you have a business partner
12. Store important documents
Give copies of your important documents to your trusted advisors
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