Do you have a plan for your estate if something should happen to you? Investing a little time in planning for the possibility could spare your loved ones additional heartache in the event of your passing, and ensure that you and valuable assets like your home are correctly cared for.
The best way to begin planning your estate is establishing a will. Having a will to establish the beneficiaries of your various assets and belongings is crucial, regardless of your age, to ensure minimal confusion and accurate fulfillment of your wishes. Most people choose their beneficiaries based on relationship; if you are married or have children, the obvious choice would be to pass your assets directly to your spouse or kids. Or, you may plan to choose beneficiaries in your extended family or outside of your family all together. Regardless of who initially comes to mind, there are important considerations to think through other than your relationship with that person(s).
Inheriting assets is undoubtedly a gift, but it often times comes with tax burdens or other strains. Does the person you want to inherit your home have the financial capability to take care of it, including mortgage, property tax and maintenance? Perhaps you intend for the beneficiary of your home to keep it in the family, but have you discussed whether selling it would be an option for him or her? Some homeowners choose multiple beneficiaries for a single property – will yours be able to agree on how to handle that asset, or could tensions arise? In that case it may be better to instruct the executor of your will to sell the home so that you can liquidate the value and distribute it evenly amongst your beneficiaries.
These are difficult questions that are never enjoyable to address, but having peace of mind for yourself and your loved ones is well worth it. If you are interested in estate planning, I would be happy to recommend someone who can help you. Here is a short list of the different factors you will need to be prepared to discuss when you begin planning your estate, and please don’t hesitate to reach out to me if you have any questions.
- Values: What legacy do you want to leave? This is especially important if you have young children – who will you entrust them to and how do you want their religion, education and rearing to be handled?
- Valuables: Unless your entire estate is passing directly to your spouse, you will want to carefully consider beneficiaries for illiquid assets like your home, vehicle and valuable collections, as well as liquid assets like retirement and savings accounts.
- End-of-Life Care: If your passing is due to an illness or injury, putting an end-of-life care protocol in place will ensure that you are comfortable and at peace leading up to your passing.
- Life Insurance: If you have not committed to a life insurance plan, making a small monthly payment that will guarantee your funeral expenses and your family are cared for in the event of tragedy is an important step.