What does feeling in control mean to you? Maybe it means getting that morning run in, checking off your whole to-do list for that particular day or week, or getting your kids off to school on time. What drives many of us is often specific to the present, but how do you get in control of your future? Sure, you may be setting aside money for retirement and setting those long-term financial goals, but how can you be confident you and your loved ones are protected along the way? The answer is estate planning.
If estate planning feels like a distant future to you, think again. Although the definition of estate planning may not feel too relevant right now (it’s the preparation of tasks that serve to manage an individual’s asset base in the event of their incapacitation or death), there are many things you can and should do now to ensure you’re prepared when the time comes. Establishing this foundation can be the key to a more confident future for both you and your loved ones. And who doesn’t like to sleep a little bit better at night?
So where to start on such an important task? We’ve broken down the basics to make sure you have the baseline framework to build and leave your legacy:
- Tangible vs Intangible Assets: although it may feel like you don’t have many assets now, it’s still important to map out what you have from a tangible and intangible asset perspective. For example, tangible assets may include real estate, cars, collectibles or other high value items or personal possessions. On the other hand, intangible assets would be your checking and savings accounts, investments accounts, life insurance policies and retirement plan accounts.
Next you will jot down an estimated value for each asset or account as a starting point to get an inventory of your financial picture.
- Start a Will: think through who will look after your loved ones if something happened to you. Begin understanding life insurance and the different options there. Especially when kids are in the picture, name a guardian. This isn’t set in stone, and can change as circumstances evolve over time, but in the off-chance something were to happen to you, it’s important to take the steps now to know your loved ones are in the right hands.
- Think about a Living Will: a living will is a directive to physicians that states your wishes for end-of-life medical care, in case you become unable to communicate your decisions. Again, this may not feel relevant to you today, but what if something were to happen unexpectedly? Are these the type of decisions you’d defer to your loved ones to make on your behalf? Think of it this way, it doesn’t hurt to have this documented and in place.
- Designate a Power of Attorney: a power of attorney is the authority to act for another person in specified or all legal or financial matters. Again, this may feel like overkill at this point in your life, but you may even consider a limited power of attorney at this point. This will put guidelines in place on what that designated person can and can’t do as it relates to your financial affairs. The important thing here is you have someone named to manage this important part of your life as to minimize the complexity that could come if the need ever arises.
- Review Beneficiaries: although you probably named a beneficiary for your financial accounts when you opened them a long time ago, it’s important to scan those and ensure it’s all up-to-date. If you forgot to fill in a beneficiary, the account would go to probate and get distributed based on the state’s rules. Or if you marked your beneficiary as someone from the past, it would go to them rather than who you may have intended it to. It’s important not to get sloppy and miss this important step.
- Knowledge is Power: like most things in life, the more you know, the more equipped you will be to make the right decision. Although you may not become an estate planning attorney overnight, there are often workshops, seminars or professionals who can help walk you through the process and ensure your needs are met.
There’s something to be said about feeling in control of your life… both today, tomorrow and especially for years to come. The busier we get with families, travel, work and life, the easier it is to push important things like estate planning off. After all, most people aren’t jumping out of their chair to line up their plan if they were to pass away. Which may explain why 6 in 10 US adults haven’t completed a will according to AARP. But thinking through the alternative of what may happen if you miss this important step could be the deciding factor between starting and delaying it.
Once you have your estate plan together, don’t forget to revisit it periodically for any updates. After all, you hold the keys to a confident future for you and your loved ones. Don’t delay or miss the foundation upon which to build it.