When the inevitable happens, you have to be prepared.
Estate planning is devising a formal framework of tasks you want to be done in the event of your demise. This involves the painstaking process of managing your assets, settling your financial obligations, and securing legal documents. If you want everything mapped out before you pass away, create a well-crafted estate plan as early as now. This article outlines the five steps of building an end-of-life plan.
Review Your Life Insurance Policy
One of the most integral parts of estate planning is looking into your life insurance as this ensures the financial security of the people you will leave behind.
Life insurance provides an immediate source of funds to your designated beneficiaries for their everyday expenditures. They can also use your insurance benefits to settle final income taxes, funeral costs, and emergency expenses.
When preparing your end-of-life plan, you have to review your list of beneficiaries or the recipients of your death benefits. This can be your spouse, your children, your parents, or at times, a legal entity. If you’ve recently gotten married, divorced, or gave birth, all the more reasons to update your life insurance policy.
Also, when fixing your insurance, don’t forget to assign a secondary beneficiary in case the primary beneficiary passes away. If you want a more in-depth discussion of how to go about this, seek legal advice from an experienced life insurance attorney.
Craft Your Final Will and Testament
A last will and testament encompasses two things: the management of your assets and the custody of your dependents. This legal document contains specific instructions on how you want your possessions and properties to be distributed upon your demise, as well as who will be the legal guardians of your minors, if any.
If you pass away without crafting a final will and testament, the court will decide on your behalf in terms of estate distribution and guardianship arrangements. To have full control of these things even in your passing, preparing this document is a must.
Your final will and testament should also designate an “executor” or a representative of your choice. This personal appointee will be responsible for carrying out your final wishes and transferring the ownership of your estate, which is known as the probate process. Your final will and testament will only be made effective at the time of your death.
Execute a Power of Attorney
If you want to appoint another person to make decisions for you long after you’re gone, secure a power of attorney. This is a legal document that gives another person the authority to make financial decisions on your behalf in the unlikely event of your passing. This can be your spouse, your children, or your relative.
A power of attorney is made effective immediately after the execution of the document. While this does not strip you off of your powers as “principal,” you should know that your appointee or “agent” will be given the legal authority to interfere in your financial affairs even when you’re still alive.
If you decide to make changes after execution, you are allowed to make necessary modifications in the document for as long as you inform the parties involved. This binding document is valid until revoked or until the specified termination date. The requirements of procuring a power of attorney vary by state. You can check out your state’s official website to access specific details and standard forms.
Prepare a Healthcare Power of Attorney
If you want to be proactive, create a healthcare power of attorney. This document vests powers on another person to make decisions regarding your medical needs. A healthcare power of attorney designates an individual of your choice to exact full control of your healthcare requirements when you’re no longer capable of making decisions for yourself. Your appointee can be your spouse, relative, friend, or anybody you trust.
This document will be useful when you’re suffering from a serious illness or in a critical condition. Your healthcare proxy will carry out your specific preferences in terms of medication or treatment. So, as early as now, you have to communicate your exact requests to your appointee just in case you find yourself in a life-and-death situation.
Write a Letter of Intent
A letter of intent contains detailed instructions for your loved ones. This is a non-legal document that discusses personal requests you want to be done after your passing. Your letter of intent can include what type of casket you like, where you want to be buried, what kind of flowers you prefer, or who will give your eulogy.
You can also write down specific information regarding your bank accounts or the location of your hidden possessions. More so, you can use this document to enclose important names and contact information that your loved ones will need in the event of your death. These key individuals might be lawyers, brokers, debtors, and advisors. If you want to disclose details about your digital assets such as websites and social media accounts, you can also put them in your letter of intent.
When the inevitable happens, it’s best that you come prepared. By following this comprehensive guideline, your family members will be spared from all the trouble that comes with losing a loved one.