Recently, I got off the phone with my mom, who shared some family updates— the on-goings of our family in the States, Antigua, and Tobago. Most of the news was positive; one piece wasn’t so positive, though. I learned that a family member was at the beginning stages of a debilitating mental and physical illness.
When I hear about illness, I can’t help but think about death. And when I think about death, I can’t help but think about estate planning. I hope that my older and not-so-healthy family members have their affairs in order. Hearing news like this reminds me that I need to take care of my affairs while I have youth and health on my side. In other words, I realized that I needed to get on the ball about estate planning.
Estate planning is the collection of preparation tasks that serve to manage an individual’s asset base in the event of his or her incapacitation or death, including the bequest of assets to heirs and the settlement of estate taxes. Most estate plans are set up with the help of an attorney experienced in estate law.
Despite the images that movies and television promote, estate planning isn’t exclusively for the wealthy or the old. We all need clear guidelines, orders, and plans for when we die or in case we become disabled, no matter our income level or the value of our estate. And the sooner you start getting your estate affairs in order, the more peace of mind you will have, the less confusion there will be, and the higher the chances that generational wealth will be passed down to the intended recipients with less contention and drama. When you sit with an experienced estate-planning attorney, please ensure that you plan to complete the following major estate-planning tasks.
Draft a will or testament, which is a legal declaration by which a person names one or more persons to manage his estate and provides for the distribution of his property at death. Limit estate taxes by setting up trust accounts in the name of beneficiaries, who are the individuals designated as the recipients of funds or other property under a will, trust, or insurance policy.
Establish a guardian for your dependents and make sure the individual or couple you choose shares your views, is financially sound, and is genuinely willing to raise children. As with all designations, a backup or contingent individual or family should be named as well. Absent these designations, a court could become involved and could rule that your children live with a family member that you wouldn’t have approved of. In extreme cases, the court could mandate that your children become wards of the state.
Name an executor of the estate to oversee the terms of the will. An executor is defined as the person named to distribute a deceased person’s property that passes under his or her will and who arranges for the payment of debts and expenses. Some of the other responsibilities of the executor may include, but are not limited to, getting a copy of the will and filing it with the local probate court; notifying banks, credit card companies, and government agencies like the Social Security Administration of the decedent’s death; setting up a bank account for incoming funds and to pay any ongoing bills; filing an inventory of the estate’s assets with the court; maintaining property until it can be distributed or sold; paying the estate’s debts and taxes; distributing assets; disposing of other property; and representing the estate in court, if necessary.
Create or update beneficiaries on plans, as a number of your possessions can pass to your heirs without being dictated in the will. A 401k is an example of this. In fact, all retirement accounts and insurance plans should contain a beneficiary and a contingent beneficiary because they typically pass outside of a will.
Set up a durable power of attorney (POA) to direct other assets and investments. It’s important to draft a durable power of attorney (POA) so that an agent or a person you assign will act on your behalf in the event of your disability. Without a power of attorney, a court may be left to decide what happens to your assets if you are found to be mentally incompetent. The court’s decision may not be
what you wanted.
Finally, be prepared to take immediate action to alter your estate plans as changes and shifts to your assets and relationships occur.
BMWK, are you prepared to leave a legacy for your family?
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