Estate Planning: Where do I begin?

Whatever the size of your estate, it is important to plan. Without a proper estate plan, the legal and financial issues raised by your death, or your incapacity, will be more difficult and expensive for your loved ones. Unfortunately, most of us procrastinate because thinking about, and then actively planning for, death or disability is an unpleasant prospect. It is far easier to focus on the more immediate concerns in our lives. However, while estate planning may seem like a daunting task, it need not be. As with almost everything else, getting started is the hardest part.

A good estate plan will involve a number of legal documents, the most common of which are wills or revocable trusts, beneficiary designations, financial and health care powers of attorney and living wills. In a series of articles over the next several months, each of these documents, as wells as others, will be discussed in greater detail. However, before any legal documents can be drafted, there are initial steps you will need to take and issues to which you must give at least some preliminary thought.

First: Take stock of your finances. Compile a detailed list of not only your assets, but also your liabilities. While the primary purpose of your estate plan is to address a non-financial goal, namely taking care of your loved ones, the best approach is often determined by your financial situation.

Second: Consideration your children. If they are minors, who will be the guardian? Who will raise your children? Choosing a guardian will force you to decide what values are most important to you: religious beliefs, cultural identity, parenting styles, education, family size, geographical location, financial skills, just to name a few. Also, consider whether your children are mature enough to manage their inheritance. If not, the funds should be placed in a trust for their benefit. Who should be the trustee? The trustee will not only manage the trust funds, but also decide when and why to make distributions to your children. Lastly, if you have a blended family, consider how much you wish to leave to your children, and how much to your spouse.

Third: Consider your other beneficiaries. If you do not have a surviving spouse or children, who should receive your assets? Would you like to leave your money to other family members, your church, your favorite charities, or all of the above?

Fourth: Consider yourself. If you become incapacitated, but do not die, who should manage your finances? Who should make decisions regarding your health care? What values are important to you regarding to your health care?

This initial phase of the estate planning process is the hardest because the non-financial decisions are always more difficult to make than the financial ones. Once completed, however, the rest of the process should flow smoothly.

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