4 Vital Estate Planning Tips
Estate planning is a difficult topic, as it requires you to think about a world without you in it. No one likes to reflect on their own demise, which is why many people simply put estate planning off for another day and only get around to it when the chips are down. However, taking care of your estate planning now is the right step, even if you don’t have any dependents. It’s a relief off of your shoulders and it leaves plans in place if the unthinkable happens to you.
These four items cover the needs of most people. If you have a significant net worth, you should consider talking to a lawyer for specific planning advice for your estate, but for most people, these four steps should take care of most of your estate planning needs.
1. Have an Estate Planning Master Document
A master information document is simply a collection of the information a person would need to properly close out your accounts and obtain any and all account balances that you might have. This is an invaluable tool for whoever it is that is responsible for cleaning up your estate after you pass away.
It’s easy to prepare one. All you need is a printed document stored in a safe place that people will check when you pass away. That document should include account information for every account you have open, a complete list of every person entitled to anything upon your passing, a complete list of all debts and all assets, and a detailed description of how to handle any business assets you may have, a copy of your will, your living trust, and any other documents pertaining to your estate.
2. Make Sure to Have a Life Insurance Policy
If you’re leaving behind anyone who relies on your income in order to keep food on the table, clothes on their back, and a roof over their head, you need to have a life insurance policy in place.
Insurance salespeople will try to get you to buy lots of types of policies, but all you need is a term policy with a term long enough so that anyone reliant on you will be independent by the end of the term. For most parents, that means a ten-year or twenty-year term policy. How much? It should provide at least a few years of your salary.
3. Create a Will
If you have items you want for a person if you pass, you need a will that dictates the handlings. Otherwise, you’re relying on the court and your family and that puts a burden on all of them.
Make a list of any items that you want for the people necessary. Then, have the rest of your estate liquidated and split among descendants or given to a charity, as per your desires. This can easily be transformed into a legal will using a service like LegalZoom.com.
4. Include Guardianship Info While Estate Planning
Who should care for your children if you suddenly pass away? It can be a difficult decision, and it should be one that you discuss with the people you are considering. Most important, such wishes should be set down in a legal will.
Estate planning is an intimidating thing, but many of the steps that people need to take are very simple. They also add to your personal peace once you’ve taken care of them. If you don’t have these in place, consider time to make sure those matters are in hand.
This article originally appeared in U.S. News and World Report Money.