60-Second Guide to Estate Planning
Despite what you may think, estate planning isn't all about what happens after you die. Besides death, there are plenty of other unpleasantries -- accident, injury, or other malady that makes you unable to manage your own affairs for a while -- that can go much more smoothly for you and your loved ones if you've prepared for them ahead of time.
Planning your estate doesn't have to be painful. Spend a minute to get your bearings and see how easy it can be to get your affairs in order.
0:60 Pick the people you want to get your stuff
The best-known way for you to say who gets your possessions when you die is to write a will. Contrary to popular belief, wills don't have to be complicated. Depending on whom you want to receive your assets, how much your estate is worth, where you live, and what types of things you own, a simple will may be adequate to get the job done.
0:47 Consider setting up a trust to simplify your passing
On the other hand, some folks will find that a simple will ends up leading to time-consuming, expensive legal processes such as probate (the court proceedings to make sure your estate is handled appropriately in the eyes of the law). Creating a trust may be the answer, since assets accounted for in this document can often get to your heirs much more quickly than those governed by a standard will. Setting up a trust is not something you should undertake lightly -- or without the right help. A good estate planning professional can help you figure out whether a trust is right for you.
0:35 Protect yourself during your lifetime
As we mentioned before, estate planning also includes preparing for any situation that leaves you unable to manage your own affairs. The right documents, such as durable powers of attorney and advance medical directives, can ensure that someone will fill your shoes if something happens to you.
0:21 Name the right beneficiaries
Not all of your assets are governed by your will. Things like retirement accounts and life insurance go to the people you name on beneficiary forms. Changing your will or creating a trust won't automatically change your beneficiaries on these accounts, so make sure you update information on all your accounts.
0:14 Save on taxes
Estate taxes hit relatively few families, but the ones who do have to pay typically get hit hard. A few mistakes can mean hundreds of thousands of dollars being taken away from your children and going to your least favorite relative -- Uncle Sam. Yet with simple strategies (we've got a few posted elsewhere in this area), you can take steps now to reduce or eliminate estate taxes and make sure your heirs get everything you've worked so hard to save.
0:05 Stay on top of it
After you have your planning done, things can change. A marriage, divorce, or new child or grandchild can shift your thinking on what you want to happen with your money. Get the help you need to make appropriate changes and make sure that your wishes never go out of style.
For more on getting your estate in order, read about:
- What you have to do before you die.
- Common beneficiary form mistakes people make.
- The truth about living trusts.
- The 10 estate planning documents you must have.
- Some practical advice on planning your estate.