Estate planning is the most immediate step you take in protecting your family’s interests. A well-prepared estate plan ensures that your loved ones are provided for and your assets are secure after you’ve passed away. If you pass on without a plan, your fortune could go to the wrong person(s). Below is a guide to getting started with some estate planning tips.
Draft a will
Writing a will is the most basic strategy in estate planning. It is a document that directs how your assets will be divided after you are deceased. A will can also name a guardian for your minor children and stipulate who should look after your pets. Ensure that you sign your will before non-related witnesses, who should also approve and sign it. After that, inform other people about the document’s location and make it accessible when needed.
Assign financial assets to beneficiaries
One way to prevent your estate from being divided in probate courts is to have beneficiaries named who will receive your financial assets. The probate process is usually slow and expensive, so it is always good to announce who will receive these assets in advance of your passing. Some accounts, such as bank savings and retirement funds, can be set up to have a transfer of death (TOD) designation to amend any beneficiary information like marriage or divorce.
Have a trustworthy nominated executor
If you are worried that your beneficiaries won’t act as you wish, you can appoint a responsible estate administrator to distribute your wealth. Select a qualified individual if you foresee issues and disputes arising after your death. An estate administrator ought to be responsible and able to make wise decisions concerning wealth distribution.
Consolidate your finances
If you have several 401(k) retirement accounts or several IRA accounts, you may consider consolidating them into one individual IRA. Bringing together your finances could prevent high tax rates. It can also allow for better investment choices through a more extensive selection of investments and make the process more manageable overall.