10 estate planning resolutions to make this year
As you ring in the new year, consider some estate planning resolutions to protect and provide for loved ones. After all the surprises of the past year, estate planning is now more important than ever. However estate planning may seem burdensome and scary. What should you do? These 10 estate planning resolutions can help you start a comprehensive estate plan.
First and foremost, if you have an estate plan now is a good time to review and update it. If you don’t have one, follow these estate planning resolutions to help family members navigate future life events such as your incapacity or death.
Keep in mind estate planning doesn’t have to be burdensome. Follow one resolution at a time. Additionally, create a to-do list to track your progress. Because estate planning is a process, it is important not to get discouraged. Furthermore, know that each step you take gets you closer to protecting your family when you are not around.
1. Check Beneficiary Designations
First, check that all your bank accounts, investment accounts, IRAs, and life insurance policies have the correct beneficiary names. Second, make any necessary updates or corrections. It is important to have the correct beneficiaries on TOD (transfer on death) accounts as these instructions operate outside of your will. So if you have a friend listed on your life insurance policy and then subsequently get married, you must change the beneficiary information. If you don’t change the beneficiary designation to your spouse, your friend will get the proceeds. Confirm your beneficiaries are correct to avoid mistakes.
2. Investigate Life Insurance
Determine if you need life insurance and how much to protect your family if you die prematurely. Talk with an experienced life insurance agent to explore your options. For example, look into term life insurance because these policies are generally less expensive. Recognize that life insurance needs may change over time. For instance, you may not need to carry as much life insurance once your children reach adulthood and can support themselves.
3. Name a Medical Power of Attorney
It is critical to have a person make your healthcare decisions if you are incapacitated and cannot speak for yourself. Therefore, name a trusted person as your healthcare surrogate or medical power of attorney. A medical power of attorney is a document giving your representative or your “agent” the power to speak with your medical team. They also make decisions related to your care. For this reason, make sure your agent understands medical information and your wishes.
4. Put Together an Advance Medical Directives/Living Will
If you had an end-stage or terminal illness, what measures do you want taken to prolong your death? A living will or advance medical directive outlines your wishes for your medical team to follow. Figure out what you want and put it in writing. Because this involves your life or death, it is important to make these decisions for yourself. Don’t burden your loved ones with wondering what you would want. Name a trusted family member or friend as your agent to follow your wishes.
5. Name a Financial Power of Attorney
If you are suddenly injured, who can pay your bills or manage your financial life? Designate someone to be your financial power of attorney. A durable or financial power of attorney handles your finances, pays your bills, and acts on your behalf if you are incapacitated. Because your agent acts as you, make sure your power of attorney understands their responsibilities. Most importantly, name an agent who is trustworthy and honest.
6. Draft a Last Will and Testament
A will is only activated once you die. Draft a will to name guardians for your minor children, and distribute your assets as you wish. If you die “intestate” (without a will), then your assets are held up in probate court. Moreover, a court may award custody of your children to someone you don’t like. The court does not understand your family dynamics or how you want your estate distributed.
7. Look into Trusts
While trusts are seen as extremely complicated, they are an important tool for estate planning. Therefore, take the time to learn about the benefits of a revocable trust. In addition to taking assets out of probate, trusts can also be set up to protect loved ones long after you are gone.
8. Plan for Business Succession
If you have a business, plan for the orderly sale or transfer of it. Identify who can run your business in your place. Determine the best way to keep or close your business once you are gone. Check out key man insurance or other ways to provide funds for the business.
9. Schedule an appointment with Estate Planning Attorney
Talk with an estate planning attorney to evaluate your situation. While every family is different, attorneys craft a specific plan to benefit your family and their specific needs. Ask questions and raise concerns. Make sure you are comfortable and understand how these documents help you.
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