A basic estate plan provides essential legal documents for your family in the event of your incapacitation, sudden illness, or even death. It is crucial to have an estate plan in place to protect your family and your assets. Your estate includes everything you own. Therefore, it is a good idea to plan for what will happen to your estate. This article can help you determine how you will distribute your assets by providing you with five steps to basic estate planning.
Where to Start
It is vital to have, at the very least, the essential estate planning documents to protect you and to help your family manage your affairs in the event of your illness, hospitalization, incapacitation, or death. However, estate planning can be a challenging process to navigate on your own. Therefore, we recommend consulting with an estate planning attorney to help guide you through the process. By creating an estate plan, you will designate who will receive your assets and handle your responsibilities after your death or incapacitation.
1. Take Inventory of Your Belongings
Many people think they do not have enough assets to create an estate plan. However, it is essential to remember that your estate includes everything you own. You may be surprised at how many assets you have. Therefore, the first step in basic estate planning should be to take inventory of your tangible and intangible belongings. An example of a tangible belonging would be your home or real estate, and an intangible belong would be your savings account. Once you account for all your belongings, you will need to estimate their value. You can do this through recent home appraisals and statements from your financial accounts.
2. Asset Protection
After you take inventory of your belongings and determine what is in your estate, you will want to consider your family’s needs. It is essential to think about protecting your assets and your family after you are gone. You will need to ensure you have enough life insurance depending on your family’s needs. You will also need to select a guardian for your children and document your wishes for their care. It is important to have this information written down in your will and estate plan.
3. Establish Your Directives
A basic estate plan includes several legal directives or documents that specify what actions should be taken if you can no longer make decisions for yourself. Some of these directives include Last Will & Testament or Trust, Healthcare Power of Attorney, Financial Power of Attorney, and Advance Directive/Living Will. In Maryland, there can be severe consequences if you become incapacitated or die without a will, and these directives can help prevent serious consequences.
4. Review Your Beneficiaries
You want to make sure the right people are getting the correct inheritance or responsibility. It is always good to review your beneficiaries because those designations can often outweigh what is written in your will. Many people often forget who they named a beneficiary on their accounts. You will want to check your retirement and insurance accounts to ensure the correct beneficiary is included. It is also a good idea to name contingent beneficiaries if your primary beneficiary dies before you and you are unable to update your designations. Remember never to leave any beneficiary section blank, or your assets will be divided by the state.
5. Plan to Reassess
If you created an estate plan years ago, odds are it is now inaccurate. It would be best if you revisited your estate plan periodically. It is imperative to update your estate plan if you are experiencing significant life changes like getting married, having a baby, starting a new job, or losing a loved one. Your circumstances and situation may impact how you decide to distribute your assets. The laws in Maryland often change as well, which means you may be missing out on better ways to protect your family and your assets.
Estate planning does not have to be an expensive or complicated process. Our Maryland estate planning attorneys know the estate tax laws and can help guide you through the entire estate planning process! For about the cost of a weekend getaway, most families can have the peace of mind and assurance that their needs will be handled according to their wishes. Get started by downloading free legal guides or scheduling a consultation.