You may keep hearing about how important it is to have an estate plan but not know exactly what that means or how to get started. You might also assume that you do not need an estate plan unless you are rich.
This is not true. Almost everyone can benefit from having an estate plan. Chances are, you have family members or loved ones to whom you would like to give certain things or you want to make sure are taken care of if you pass away or become incapacitated.
There are some basic steps you can take to start your estate planning. Remember that estate planning involves more than just having a will drafted.
In addition to a will, an estate plan can include a power of attorney, trust or various other estate planning tools. Your estate plan is based on your specific situation, so you may need one, some or all of these tools.
Make lists of your property and debts
Even if you think you have nothing, you probably have more than you think. Make a list of all of the property you own.
This list should include major items, such as a home or vehicles, but it should also include minor items, such as your personal property. Do not focus only on monetary value. Perhaps you have a special picture or item from your youth that you would like someone else to have after you pass away.
Make a list of your debts, as well. Someone will be administering your estate after you pass away, and they will be responsible for paying any of your creditors. Having a list of your debts and the amount of the debt can make their job easier.
Drafting a will
Once you have your lists made, it is time to determine what estate planning documents you need. You will probably need a will.
Identify who you want to receive the items in your will. These people are called your heirs or beneficiaries.
It is important to note that not all of your property is included in a will. Retirement accounts or life insurance accounts are examples of things that allow you to choose a beneficiary.
You may already have a beneficiary designated for these items. Review your beneficiaries regularly and update them, if necessary.
Some of your beneficiaries may have passed away themselves, be people you have lost contact with or simply be people you no longer want to be beneficiaries.
It also helps to appoint backup beneficiaries, in case something happens, and your primary beneficiary information is outdated, and you do not have a chance to change it.
Additional estate planning documents
Decide if you need any other types of estate planning documents besides a will. If you have children, this could mean setting up guardianship documents.
If you are concerned about what would happen to you if you became incapacitated, consider having a living will made. This allows you to choose someone who makes major medical or financial decisions for you if you cannot make them for yourself.
Don’t forget about taxes
Learn about any tax implications of your estate plan. There are many ways an estate plan can be used to avoid or minimize tax consequences. This includes federal taxes or Maryland estate or inheritance taxes.
While these are some basic steps to get you started on your estate planning, it is natural to already feel overwhelmed.
A consultation with an estate planning attorney can help. It is best to talk over your life situation with a professional who can advise you on the estate planning options that work for your situation and help you with setting up your estate plan.