If you don't have an estate plan, or you need to update it, then you shouldn't wait.
Here are five steps to get your estate planning affairs in order.
Make a list of your assets
The first step in getting organized and on the right track is to assess your estate. You need to be your own investigator and figure out what you own.
One of the most straightforward ways to begin this process is to write down a list of all of your assets, including bank accounts, insurance policies, and retirement accounts, on one page. Then move onto tangible real property such as a home or income rental property. Do you have any personal pieces of property that should go on this list?
Then, on a separate sheet of paper, you will want to write down all of your debts. Include any leases on cars or rent-to-own property. What about credit card payments, or are you debt free? If not, then you will want to make a note of all of these records.
Make sure that you compile all of the corresponding paperwork. This process can take a bit of time. First, you will want to locate all of the necessary paperwork. Then you should create a centralized file so that you can store away important paperwork like your IRA documents or your savings account information.
Calculate the worth of your assets
The next big step in putting together your estate plan is figuring out how much you will leave behind. You may want to put together a financial document where you begin to take stock of what your assets are worth.
Make sure to list the actual worth of each item. You will then want to list out all of your debts, including the full amount of these liabilities. From this point, you can deduct your debts from your assets to come up with an estimate of the amount you will leave your loved ones.
Get a living will and a power of attorney
It cannot be stressed enough that these documents are key to ensuring you retain control over what happens to you and your finances if you should become ill or incapacitated. So let's review the benefits of each document.
A living will is a document that allows you to select and outline the specific forms of medical treatment you would like to receive, should you be unable to communicate your wishes. In other words, the document outlines specific medical instructions for your doctors.
For example, you get to dictate whether you would like to receive life support and for what duration of time. The document also enables you to outline other types of medication or medical treatment you would like to receive. Ultimately, with a living will, you alone get to decide how you will be cared for in the future. You can also appoint a medical power of attorney to make health care decisions for you if you lose capacity.
A power of attorney for health care allows you to designate who will control your finances should you become ill or incapacitated.
Remember that list you made up above in steps one and two. Go over it and if you haven't already done so, start requesting beneficiary forms for any accounts that allow you to designate payable-on-death beneficiaries.
If you are married, most likely, your spouse owns half or is designated as the beneficiary of the account, but it doesn't hurt to put it down on paper officially so that there are no further questions asked.
Choose a living trust or last will
The bottom line is that if you don't write an estate plan, the court gets to decide how your property will pass to relatives and who will retain guardianship over your children. Given the import of these decisions, it is critical to put something down on paper in a last will or a living trust so that nothing is left to chance, and your wishes are followed exactly.
A last will is one type of estate plan that enables you to designate everything from property to guardianship. It cannot be stated enough how important it is to have small children put something down on paper so that guardianship is settled clearly, and there are no family conflicts down the road.
A will also allows you to designate how your property will be distributed clearly. Everything from your favorite set of baseball cards to your prized home can be designated so that your loved ones are taken care of according to your wishes and not state laws.
Like a last will, a living trust also enables you to provide for guardianship and distribution of property. However, the biggest advantage of a trust is that you avoid probate, which can be costly and time-consuming.
Find out more about Estate Planning Basics