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The birth of a child is a joyous and life-changing occasion. Immediately, you feel inspired to live more consciously, save up money, and build the brightest future you possibly can for your new child.
At the same time, a birth, just like other big-picture events such as marriages, illnesses, and impending surgeries, also gets you thinking about less uplifting topics — ones like your mortality and your estate. The importance of planning for your family’s future cannot be understated.
Still, roughly 55 percent of Americans say they don’t have an estate plan in place, mainly because of how daunting it is to start the planning process. Between not knowing to whom to turn for advice, fretting about high attorney fees, and envisioning mountains of paperwork, it’s easy for this vital planning activity to fall farther and farther down the to-do list.
Set the Wheels in Motion
An estate plan is a living, breathing set of documents. The first version you create should be as comprehensive as possible, including your will or trust, a durable power of attorney, and an advance healthcare directive.
The ultimate goal is to enable your loved ones to make important decisions on your behalf instead of ceding power to the courts. The more information you include in your first estate plan, the less confusion and the fewer arguments there will be if something happens to you.
Keep in mind that your first estate plan certainly doesn’t have to — and shouldn’t — be your last. You can easily revisit it down the road and should update it and make changes as your life evolves. Ideally, future iterations will involve small adjustments rather than sweeping revisions.
Because estate planning can be so emotionally challenging, people often forget several core components when creating their first plans. These three key details are commonly overlooked:
1. Choosing an executor. If you don’t include an executor in your estate plan, your loved ones may end up in costly, acrimonious battles about who should be in charge. We’re seeing that now with Prince’s family. The singer appears to have had no estate plan whatsoever, leaving his siblings, half-siblings, and other relatives to sort things out in court.
Your executor will have to take care of many details after you die, so think carefully about who can best provide guidance and support during that time. Select someone your entire family trusts, and ask whether he or she is willing to take on that responsibility before making an official designation.
Talk with the executor about how you want your last wishes carried out. That conversation will make the estate planning process more personal, and it will ensure that you and your loved ones are on the same page.
2. Naming a guardian. This is a crucially important decision. The guardian will look after your children if both parents die before the children become adults. Many people avoid this decision because they can’t decide who is best suited to care for their kids. However, ambiguity on this topic only leads to added stress and pain, particularly for the children.
After Michael Jackson’s death, for example, it was unclear whether he had designated a guardian for his three children. After much drama, debate, and media coverage, his lawyers eventually located a will that gave guardianship to his mother and to Diana Ross.
Talk with your chosen guardians about whether they’re up to the task, and share your expectations for how they would raise your kids. People often set aside money to cover their children’s expenses if the guardian does have to step in. That’s another tough conversation to have, but it’s important. You want your kids to have as much stability as possible if the worst happens. The last thing they need is to be at the center of fights among friends and relatives or at the mercy of the state’s custodial system.
3. Specifying heirloom distribution. Family heirlooms may not carry much monetary value, but they likely mean a great deal to someone in your family. Unfortunately, these items are often forgotten in the estate planning process. You’d be amazed at how much confusion and angst Great-Aunt Laura’s china could potentially cause.
When Robin Williams passed away, his will stipulated that his clothing, jewelry, and personal effects were supposed to go to his children, while his house and its contents were left to his wife. However, the tuxedo he wore when he and his wife got married was inside the house. The courts had to determine whether it qualified as clothing that belonged to the children or an item in the house that rightly belonged to his wife.
Head off that type of sticky situation by being explicit about which items go to whom. Family members will want different items as remembrances of you, and fighting serves no one. The clearer you can be about who gets what, the better for everyone.
Estate planning doesn’t have to be intimidating — and if you haven’t yet begun the process, I highly recommend you get started today. Knowing your estate is in order will alleviate stress, avoid drama, and allow you to enjoy your time with loved ones all the more.