Start with your intentions, and your next steps will be clearer.
3. Consider your values.
After you've taken stock of what you have, take stock of what you want to leave behind. What legacy, memory, or impact do you want to make?
Perhaps, as a first-generation degree holder, you have a high value for college education. Or, perhaps, you want nothing more than to enable the generations that follow you to have enough for down payments on their homes. What do you value?
4. Brainstorm your beneficiaries.
In most states, next-of-kin are the standard estate beneficiaries when a will doesn't exist. But such a standard may not align with your wishes.
Perhaps your life has been enriched by a few close friends. Make a list of the people you'd want to receive a piece of your estate, then consider the legacy you wish to leave with them, both practical and meaningful.
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5. Prepare your inheritors' tool chest.
This is the step that makes estate planning complex.
Tax implications hold significant power over the final value of inherited funds, while medical coverage, life insurance policies, and other financial tools can be the difference between using up your resources in your final days versus retaining a nestegg to pass along.
Among the list of medical and legal considerations you should evaluate with a professional are the following:
- Life insurance
- Trust
- Power of attorney
- Medical Care Directive (a.k.a. DNR)
- Tax implications
6. Enlist the advice of a pro.
If the above duties sound daunting, they can be. This is where a financial advisor can help. A licensed fiduciary is legally obligated to act in your best interest, and can help navigate the ins and outs of estate taxes, life insurance, wills and trusts, and more. Getting the right advice at the right time could save your beneficiaries significant tax liability, and make the process less stressful.
7. Don't "set it and forget it."
A quality estate plan should always be updated. Beneficiaries' needs change, as do tax laws. A will is a plan to reevaluate regularly. Our advice? Don't do it alone. We recommend speaking with a financial advisor, and evaluating your estate plan together.
