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Most people think about estate planning as something they should do after they retire or when their kids have grown. However, you don’t need to wait long before you start making an estate plan.
Creating an estate plan early on offers numerous benefits. For one, it can help ensure your family will be taken care of if something might happen to you. It also gives you the opportunity to list the things you want to happen and how you want them to happen. It also helps prevent family disputes that may arise and keep your financial details private.
If you’re yet to create one, below is a guide to creating an estate plan. Read on.
When Is The Right Time To Create An Estate Plan?
Now would be the perfect time for you to begin estate planning. Regardless if you’re a breadwinner or a fresh college graduate who just landed your first job, there are plenty of reasons why you should think about what’ll happen to your family should something happen to you.
Most people don’t consider an estate plan necessary since they do not have much money to leave for their family. But it can help your family deal with the funeral and burial expenses. It also gives them access to your assets in the event of your untimely passing, which includes:
- Real Estate Properties (Home, apartment, etc.)
- Personal items
- Bank accounts
- Life insurance policies
People with multiple assets and high incomes are more likely to have a will or an estate plan, but most still pass away without one. As a result, their family will have to battle in court to access the assets and personal property of their deceased loved ones. You can easily avoid this from happening for your family if you create an estate plan beforehand.
How Can You Create An Estate Plan?
Setting up an estate plan is a complex process. That said, it is recommended that you work with a qualified estate planning attorney and a financial advisor to guide you on the legal processes of setting up an estate plan.
Here are some critical steps you’ll need to go through during estate planning:
1. Create A List Of All Your Assets
The first thing you should do is list down all your assets, including your debts. Gather all necessary documents and keep them in a secure location. You should also secure a copy of these documents, just in case.
At first, you may think you don’t have enough assets to list. But once you start making the actual list, you’ll be surprised by all the assets you actually own.
2. Make A Will
A will is one of the most crucial estate planning legal documents you need. Having a will is essential for ensuring all your wishes are fulfilled in case something happens to you, aside from determining who will have access to your estate and how your assets will be distributed. If you have children, a will also allow you to name guardians for your kids in case you pass away.
3. Develop A Contingency Plan
Consider who will cover your family’s financial needs if something happens to you. If you don’t have any strategy in place, consult your financial advisor so they can provide you with multiple options that should address your family’s needs.
Estate plans allow you to develop a well-document strategy which includes providing income for your loved ones once you become disabled while covering your medical expenses as well. This is where life insurance can come in handy, as it gives you an assurance that your family’s financial needs will be taken care of in case something happens to you.
4. Document Your Wishes
This is the part where you can list the things you want to happen and ensure that everything is followed once you die. This includes naming who will handle your assets, beneficiaries of your life insurance policies, and who will inherit your personal properties and belongings. You can also include your wishes for your funeral and burial arrangements to make it easier for your loved ones.
5. Create A Power Of Attorney
You’ll also need to create a power of attorney when making a will. It’s a legal document that designates and grants authority to someone you trust to be responsible for making decisions on your behalf should you become incapacitated or lose your ability to make sound decisions yourself. For this to be valid, you’ll have to sign this with proper mental competence. This makes it crucial to conduct your estate planning in your early years.
6. Update Your Estate Plan
Once you’ve created an estate plan, don’t forget to review and update it every three or five years. This is especially true if a significant change happens to you or your family. If you got married or divorced, bought a new property, started a new business, or opened several investment accounts, you should revisit your estate plan and update it accordingly.
Although it can make you feel uneasy when you plan for something you don’t want to happen to you, remember that you are doing this for your family. Estate planning can give you and your family the peace of mind you deserve.