Creating an estate plan has been on your mind since your marriage. However, that was three years ago, and you still have not acted. But something else provides the nudge you need: the pending birth of your first child.
Good for you. It is time to get going. In doing so, you will join the estimated 33% of Americans who have a will or living trust. Why do so few people have an estate plan? Well, according to a Caring.com survey, the top reasons include procrastination, believing they do not have significant assets or it is just too expensive to create. Now that you have decided, there are some important matters to address.
Naming a guardian and having advance directives
Where do you start? The main aspects of an effective estate plan are protecting your assets and providing for your loved ones once you have died or become incapacitated. Here are some key points when creating an estate plan:
- Naming guardian for your minor children: Give this great thought and come up with a list of potential candidates. Ideally, you want someone who has a loving home, shares many of your values, is trustworthy and has the energy and financial means to take on this role. Make sure to discuss this with them.
- Naming beneficiaries for assets that are not subject to a will: Such assets include retirement accounts, including 401(k), 457 and 403(b) plans, and IRAs. In addition, life insurance policies are not subject to a will. Make sure the beneficiary lists for these investments are updated.
- Implementing advance directives: This list may include powers of attorney and a living will. Powers of attorney are people you choose to make health and financial decisions for you if you become incapacitated. A living will declares the types of medical treatments you will accept in life-saving situations.
- Creating a trust: Examples may include a revocable trust and a testamentary trust. With the former, you manage your estate while still living and can amend it. A testamentary trust is included in a will but is not established until you die.
You want to have an estate plan in place. Without one, there is bound to be some difficulty. It is good that you have taken steps to create one.
Update and revise
Remember that your estate plan needs regular attention. When major changes take place in your life, it is time to update your will or revise your trust. But it is great that you have created an estate plan. You are steps ahead of most Americans and will provide significant peace of mind for your loved ones.