No one likes to think about their death, especially if they're younger, such as in your thirties like I am. I mean, how likely is one going to die in their thirties? But unfortunately that isn't a guarantee. The way the world is now, people often die at a young age, whether from mass shootings, terror attacks, or car accidents. Even sometimes people drop dead from previously unknown health issues- a friend of ours just a few years older than I am suddenly dropped dead mid conversation a few months back. These things are scary to think about and we might want to avoid thoughts of our mortality, but when you have children, it is especially important to make plans for your death. And hey, in some cultures, preparing for your death is a good charm for a long life. Here are some important things to know about putting your affairs in order before you die.
Planning your estate in the event of your death might seem like a morbid activity. It is difficult, especially since it means coming to terms with your mortality. Apart from that, you would also have to deal with a lot of paperwork and attempt to understand legal jargon. That doesn’t mean you should avoid planning for your estate. Studies show that 67% of Americans don’t have an estate plan. Not having an estate plan can burden your loved ones, and you would have no say in how you would like your assets to be distributed. So, what should go into your estate plan? Here are some important documents to include, and this article will help you understand why you need them.
Create an inventory of assets
Firstly, you must assess all your properties and create an inventory of your valuable items. These include your home(s), furniture, collections, computers, art, and other important items. Expect the list to be much longer than you anticipate. Once you’re done listing all the tangible assets, you should also list the intangible ones, like your retirement accounts, insurance policies, and bank accounts. Ensure that your list is thorough for your intangible assets, including account numbers, contact information, and the companies responsible for these properties.
Make a list of debts
When you pass away, your estate assumes responsibility for your debts, and it would be required to pay taxes on your properties to help cover the costs. While it is expected to have some debts after death, the last thing your loved ones would want is any unexpected debt hitting them and draining their finances. It would help, while you’re alive, to make a list of all your debts and other financial obligations. These should include car loans, mortgages, credit card bills, and any other debts you might owe. Much like your list of assets, keep your list as thorough and informative as possible. Include important details like your account numbers, where and when you signed agreements, as well as the contact information of your creditor. It would be best to run a credit report at least once every year to help you identify any debts you might have forgotten.
The last will
A last will is a document that spells out what you would like to happen to your property after your death. It also provides details on who will inherit your property. These properties include physical assets like your homes and other personal items. It includes non-physical assets like your investments, insurance, and bank account. The people that receive these properties are called beneficiaries, and it could be anyone important to you, from your family to your friends or even a charity organization. But your will is also more than a document that shares your property. If you have children or pets, you can use your will to name a guardian. Your will must also include an executor responsible for ensuring that all your wishes are carried out. Again, it could be anyone you trust to get the job done. Making a will is one of the smartest things you can do, as it ensures that your loved ones are protected and taken care of even when you will no longer be around.
Financial power of attorney
A financial power of attorney should be one of the key features of your estate plan. It allows you to give authority to a trusted person to oversee your financial affairs if you are dead or incapable of doing so. You might wonder if having a financial power of attorney would be necessary, especially if you’re in good shape right now. But life can be unexpected, and it’s better to be prepared for the worst than to have no plans. Plus, you have full control over how much power you would like to give to your power of attorney.
In your plan, you can choose to make their powers very broad or narrow. That means they can fully control your financial affairs or have very limited control. But a typical financial power of attorney would likely be responsible for bank transactions, paying bills, property management, tax issues, investment management, and many others. Another important thing to consider is finding the right financial power of attorney. Naturally, you might be tempted to select a family member, and while you can, it’s usually best to select someone that isn’t so attached to you. That’s because their emotions could easily sway them, and it could add to their stress.
Revocable living trust
A revocable living trust operates much like a will, showing how you would like assets to be handled after death. It is an incredibly powerful document that you shouldn’t ignore. What differentiates it from other documents in your estate plan is that you can make changes or cancel asset transfers anytime. Even though a revocable living trust is similar to a will, it’s not advisable to use it in place of a will. That’s because it’s likely you might not transfer all your assets into your trust, and your will would also be used to determine other important activities. A valid revocable living trust has been signed and notarized. It must also name a trustee who would manage your trust upon death. Once your trust is legitimate, you can start transferring your assets into it. Getting a revocable living trust for people who own large estates or businesses would be best. Including one in your estate planning is also a good idea if you want to avoid probate.
Funeral wishes
Dealing with loss is tough, and you’ve probably lived long enough to experience the death of a loved one, so you probably know how difficult it is to navigate life while grieving. You can write down your funeral wishes to ensure that your surviving relatives don’t have to deal with the burden of planning a funeral while mourning your death. The most important reason you must write down your wishes is to avoid conflict in your family. With your funeral plans in writing, no one can contest each other, and they would have to follow your instructions. A funeral plan should cover topics like how you would like to be sent off, whether a traditional burial or cremation. It should also include the type of ceremony you want, the time, and the dates. A good funeral plan also puts expenses in place, so you can either put some money aside or give them an idea of a budget, so keep this in mind.
Digital logins and passwords
Thanks to technology and the rise of the internet, you probably have over 100 digital accounts, and it can be challenging to keep track of all of them since you will likely have multiple login names and passwords. In fairly recent times, it’s become more common to name a digital executor in your will, who will handle all your digital assets when you die.
Now that you know what documents you need for your estate plan, it’s time to consider how to keep them safe. You can share that information with a trusted loved one or your lawyer or even share copies of the document with people who need them. You can also select a probate lawyer who would help in the execution of your estate when you pass away. But while you’re alive, ensure that you conduct periodic reviews of your estate plan, especially when something life-changing occurs.