Estate planning can be complex, and understanding the nuances that go into this area of law can be tricky. It is important to remember that estate planning is not about how much wealth you have. Everyone over the age of 18 needs to have at least some estate planning documents in place in the event they become incapacitated or pass away unexpectedly. Creating an estate plan takes the stress off of family members and other loved ones to figure out where your assets are, and where they should go when you are no longer here. Estate planning protects the assets you’ve worked a lifetime to accrue and affords you peace of mind knowing that the people you care about will be taken care of. 

No one can predict how long they will live, and illnesses and accidents happen. No one likes to think about their own mortality, or what would happen if they weren’t here, which is why families are oftentimes left unprepared. However, it is always better to be safe than sorry, and having an estate plan in place will keep you and your loved ones safe.

First, what is estate planning?

Estate planning is the process of creating a plan that distributes your monetary assets when you’re gone. Whether modest or grand, we all have assets that we can’t take with us when we die. Estate planning includes instructions for the passing of your valuables, which in turn provides financial security for your loved ones.

What assets do you need to account for?

Anything and everything you own should be included in your estate plan. From real estate to coin collections, estate planning accounts for everything you have acquired throughout your life. As life goes on, your financial situation is bound to change, and for that reason, estate plans are meant to be flexible, allowing for updates when necessary.

7 Simple Estate Planning Steps

1. Take inventory of your assets

Most people have tangible and intangible assets. Tangible assets include real estate, vehicles, collectibles, jewelry, and other personal possessions. Intangible assets are things like stocks, bonds, mutual funds, checking and savings accounts, life insurance, retirement plans, health savings accounts, and more. Once you have inventoried your list of assets, it is time to estimate their value. If necessary, you can arrange for outside valuations of certain items (i.e., home appraisals, financial account statements).

2. Establish directives

Once you have inventoried your items, the next step is to figure out what should happen to them in the event of your death or incapacitation. Directives are official instructions that you leave in regard to your assets. Most people draft either a will or a living trust (also called revocable trust) to direct the distribution of their assets. The difference, simply put, is that a will addresses the inheritance of assets to beneficiaries, but are subject to an oftentimes time-consuming probate process before your assets can be distributed to said beneficiaries.

If you opt instead to set up a revocable trust, which appoints a trustee to manage your assets, the appointee will dictate who gets what when the time comes. Revocable trusts bypass probate, which can save time, money, and allow for more privacy and control. There are pros and cons to both a revocable trust and a will, and working with an estate planning attorney can ensure you choose the right plan for your situation. 

The next estate planning document you need is an advanced health care directive. An advanced health care directive is a document that specifies what actions should be taken in regard to your health in the event you become incapacitated or too ill to make decisions for yourself. If you decide to elect a medical power of attorney, your appointee can make medicals decisions for you. Disability planning is also a necessity, despite being uncomfortable to think or talk about. 

Finally, a durable financial power of attorney is a document that allows someone else to manage your financial affairs when you are unable to. This person can act on your behalf in legal and financial instances, including paying your bills and taxes, and accessing and managing your assets. This can help your family to avoid financial disputes, but it is also a form of financial protection for you. The last thing you need to be worried about during a difficult time is whether or not your bills have been paid.

3.  Appoint and review beneficiaries

Your will and the other estate planning documents discussed above are instructions for what happens to your assets when you die, but not all assets will be passed down through your will, and some do not require probate. Properties and assets that do not require a will or probate are things like joint-property, payable on death savings, or brokerage accounts. Your 401k, IRAs, and other life insurances will be passed to the designated beneficiaries on those accounts, and it is important to review that information regularly to make sure it is up to date. Also, be sure not to leave any beneficiary sections blank on any documents—if they are still blank when you die, when your estate goes through probate the state’s rules may dictate how your assets will be distributed.

4. Note your state’s estate tax laws

Estate tax laws vary from state to state. Currently, at the federal level, only large estates are subject to estate tax. That means that up to $11.58 million of an estate is exempt from estate tax. However, this is subject to change. In Oregon, the assets excluded from state estate tax is $1 million. In Washington, the estate tax exemption is $2,193,000.

5. Consider hiring a seasoned estate planning attorney

Whether you have a lot or a little, it can be beneficial to consult with an estate planning attorney who knows the ins and outs of the processes. The slightest mistake when it comes to your family’s financial future could be detrimental. Estate planning is highly detailed, complex, and time-consuming, and hiring an attorney to help you navigate these waters will give you peace of mind knowing that you have drafted a well-constructed estate plan.

6. Organize estate planning documents and files

By creating an estate plan, you are making life easier for your family. Therefore, it is not only important to file all of the legal documents you need, but also to make sure that your estate information is stored and organized for heirs and family members to access when necessary. This can help save them thousands of dollars in managing the legal, accounting, and administrative matters. The goal of estate planning is to obtain peace of mind, after all.

7. Continue to reassess

Estate planning is an ongoing process, not a one-time event. It is imperative that you review and revise your plan as your family, your assets, and laws change over your lifetime. 

An experienced estate planning attorney is the best option to ensure your estate planning documents are in perfect order. A law firm that specializes in customizing those documents to fit your needs is the best bet in providing security for your family, your loved ones, and your assets. Having this process completed correctly is vital to protect everything you’ve worked for. For questions about getting started, reach out to our office or complete the brief form below to contact a member of our legal team.

Contact Caress Law, PC

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