Estate planning involves much more than just creating a will
Estate planning is planning for what you want to happen to you and your assets at the end of your life. Many people think that estate planning just means preparing a will, but this type of planning actually covers much more.
You need to decide who will manage your assets and medical care if you lose the capacity to make these decisions, plus what type of medical care you will consent to. Deciding what kind of life insurance you need is also essential. You need to consider whether to build a trust, which is a legal agreement specifying how the assets in the trust will be distributed. A trust also designates a person, called the trustee, who will manage the distribution.
Here are 8 steps to creating an estate plan:
- Make your medical decisions - This includes deciding when and if you will move into a nursing home, how much and what kind of care you wish to receive, and who can make medical decisions for you if you are incapacitated.
- Choose a trusted person - You'll need to choose the person, known as a healthcare proxy, who will make medical decisions if you're unable to do so.
- Update your paperwork - Make sure the beneficiaries on any life insurance policies and retirement accounts are updated.
- Value your assets - Put together a personal balance sheet that includes real estate, stock, bank balances, vehicles, collectibles, and all liabilities.
- Decide how the assets will be divided - Unless you set up an irrevocable trust, these decisions can be changed.
- Make a succession plan for your business - If you own and run a business, you probably have an idea how difficult it would be to adjust operations if you weren't there.
- Engage an attorney - No matter what size your estate is, you'll benefit from working with a professional.
- Decide what type of life insurance and long-term care insurance you need - Life insurance will support your dependents, and long-term care insurance can save your assets from being used to reimburse Medicaid.
