Worldwide, every minute, 120 people pass away. Death is not something we like to think about, but it is a certainty in all our lives. We don’t get to choose when our time in this world ends. One minute you’re there, and the next, someone has to carry on without you.
How can you help your family, friends, and loved ones carry on after you pass? The answer: establish an estate plan today. Don’t wait until it’s too late to take action. Getting started on your estate plan is not as hard as you might think, but it helps to have a starting place.
To help you get started with your estate plan, we put together this short Estate Plan for Dummies article that boils down the complexities of estate planning into bite-sized morsels.
Of course, we don’t think you’re a dummy at all. You wouldn’t be reading this article if you were! Here’s what you need to remember about everything you’re about to read. You don’t have to be a legal genius to start the process of protecting your family. Our New York estate planning attorneys at New York Legacy Lawyers have put together estate planning tips to help you. You can start today, with the right help!
ESTATE PLANS FOR DUMMIES: WHAT YOU SHOULD KNOW ABOUT ESTATE PLANNING
Estate plans should be a top priority as they cover many areas of your life, including personal wishes, healthcare desires, financial matters, and even self-advocacy. Most people are familiar with at least one idea of estate planning. Often the document people tend to start with is a Last Will & Testament.
In your last will, your goal is to identify tangible and intangible assets and to describe what you want to happen with them, clearly. Beyond assets, your last will provide a platform for you to share thoughts and even embed other parts of your estate plan, such as a trust.
TIPS FOR WRITING YOUR WILL
When you sit down to write your will, you might want to identify to the best of your ability, the answers to these questions.
- What properties do you own?
- Will you need a guardianship plan for your children?
- Who will be your beneficiary?
- Who should get ownership of pets?
- Who is your executor?
- Have you considered a trust?
- Do you trust anyone else to make financial decisions for you?
- Do you trust anyone else to make healthcare decisions for you?
- How much will your estate pay in taxes after you die?
- Is there anyone you DON’T want inheriting any part of your estate?
These questions are only the starting point. Many situations could make your last will difficult to draft on your own.
CLARIFYING FINAL WISHES
While answering the questions, think about who will be there to interpret the answers you’re pondering. Will it be your eldest child? A grandchild? Your spouse? Try to frame your answers in ways that would make sense to them. This person, or these people, will be the executor of your decisions.
Your executor will be responsible for ensuring the beneficiaries of your will receive what you want them to.
CHOOSING POWER OF ATTORNEY
A Power of attorney, or POA, gives someone the authority to act on your behalf regarding legal matters, financial situations, or in regard to your health. In this article, we’re mainly talking about two types of POA.
First, there is the financial POA. This POA is the person who will be able to speak on your behalf about your finances if you can’t be there, or are unable to manage them due to ongoing health concerns (dementia, incapacity, etc.).
Second, is the healthcare POA. In New York State, the proper title of a healthcare POA is a Healthcare Proxy. Your healthcare proxy is the individual that will make decisions on your behalf regarding crucial health matters. Some of the decisions your healthcare proxy might make for you include life support choices, and following through on a do not resuscitate order, or basic healthcare decisions if you’re not able to understand them at some point.
DON’T FORGET YOUR DIGITAL ASSETS
More and more, digital assets are becoming a standard part of these estate planning discussions. Your digital assets include things like usernames and passwords for your online accounts, logins for your computer(s), phones, and other devices, perhaps even an online business.
Having information regarding your digital life and assets available for your chosen loved one ahead of time can save them a world of trouble, and heartache. Now, they’ll be able to easily log in to pay bills or access other types of financial information. On a more personal level, they can access your photos, your documents, even your social media – and start taking the necessary steps to store those aspects of your life elsewhere or in the case of social media, transition them appropriately.
AVOIDING ESTATE PLANNING BLUNDERS: TIPS FOR SUCCESS
Here’s a guide to assist you in writing your Estate Plan and avoiding common mistakes. Listed below are some frequently occurring Estate Planning mistakes that you might want to avoid.
- Neglecting Estate Planning. Unfortunately, many of us tend to postpone creating an Estate Plan. However, failing to prioritize or complete your Estate Plan puts the financial future of your estate, your legacy, and your loved ones at risk.
- Failing to Communicate with Family and Friends. While there may be circumstances where it’s not possible to discuss your Estate Plan with loved ones, it’s generally a good idea to have at least a brief conversation with them. Doing this can help in establishing clear expectations and avoiding disagreements or conflicts among your beneficiaries after you pass away. If discussing your plan is not an option, you can include language in your estate documents that specifies that anyone who contests the plan may be excluded.
- Naming One Beneficiary. It is important to name multiple beneficiaries for your assets in your Estate Plan. It is recommended to list multiple beneficiaries to guarantee the distribution of your assets.
- Failing To Designate a Power of Attorney or Health Care Proxy. Appointing a Power of Attorney and/or a Healthcare Proxy is crucial since they will act on your behalf if you are unable to make decisions due to incapacitation. These roles typically expire upon your passing, so it’s essential to ensure they are in place while you have the capacity to decide.
- Disregarding the Need for Preparing Final Arrangements. It’s important to plan ahead for your final arrangements to make things easier for your loved ones during a difficult time. This includes deciding on your funeral or burial arrangements and communicating your wishes for end-of-life care, such as hospice or assisted living.
- Forgetting to Include Digital Assets. Don’t forget about your digital assets. Create a Digital Estate Plan to specify how you’d like these digital assets to be handled after you pass away. This is a relatively new aspect of estate planning, but it’s important given the technological world we live in.
- Failing to Consider Your Children’s Futures. When creating an Estate Plan, it is essential to thoughtfully contemplate how you intend to allocate your assets among your heirs. This is especially important if your children are still young, as the wording of your directives can have a significant impact on their future. You may want to provide specific instructions on how your guardians should use the assets to benefit your children or to take care of them in other ways.
- Overlooking Tax Obligations. It is crucial to consider tax liability when creating an Estate Plan. Estate taxes can significantly reduce what your beneficiaries receive. You should also think about how gifts to individual heirs may impact their taxes.
- Failing to Safeguard Your Estate Plans. It’s important to secure your Estate Plan so that your heirs can access it when needed. Consider storing it in a secure but accessible location instead of a safety deposit box. Keep all of your Estate Planning documents together in a safe place to ensure your heirs can find them easily.
- Failing to Keep Your Estate Plan Current. Regularly reviewing and revising your Estate Plan is crucial. Life changes such as marriage, divorce, and the birth or death of a family member can impact your plan, and it’s important to make necessary updates to avoid complications later on.
MAKE A PLAN THAT WORKS
We hope that in reading our Estate Planning for Dummies, you’ve got a list of questions longer than the ten we gave you in the article. If so, that’s great! We are here to help you figure out those answers.
At Yana Feldman & Associates we understand how personal, and unique each estate plan needs to be. We know how intimidating the planning process can be when you’re facing it alone. It’s our mission to relieve any stress you may have about the planning process.
Reach out to us today using our contact us page, and let us tell you how we can help.