Most of us consider the beginning of January an opportunity to eliminate bad habits and create goals for the upcoming twelve months. Turning the page to a new year provides a clean slate in which hopes and dreams are attainable.
And if you haven’t done so already, creating an estate plan should be at the top of your list. It may seem overwhelming, but it can be broken down into a few key components to get you started.
Estate planning isn’t just for the wealthy
It’s a myth that estate planning is only for affluent families with vast amounts of real estate, money and personal property. In truth, an estate plan is a comprehensive set of legal documents that detail how you want your assets distributed and matters handled after your death or incapacitation.
Every person is different, but every estate plan should include the following:
- A will states how you want your assets to be distributed after your death.
- With a power of attorney, you can appoint someone to manage your finances and legal affairs if you become incapacitated and can’t handle matters yourself.
- Certain assets, such as life insurance policies or retirement accounts, allow you to designate beneficiaries to receive those assets upon your death.
- An advance healthcare directive outlines your wishes for end-of-life medical care, and a healthcare proxy allows you to name someone to make healthcare decisions for you if you cannot.
- If you have minor children, it’s essential to name a guardian to care for them.
- While not legally binding, leaving a letter of intent to your executor helps them understand any particular requests you may have, such as funeral arrangements.
- Creating trusts provides several benefits, such as keeping your estate out of probate and protecting your assets from creditors.
The first step in creating your estate plan is contacting someone who can guide you through the process and break it down into manageable steps. When you’re finished, you will have peace of mind that your loved ones will be cared for and the satisfaction of achieving one of your New Year’s goals.