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How-To Guide: Plan Your Estate

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We really didn't want to bring this up, but the statisticians just told us there is a 100% chance you will die. That is not a typo.

Barring Armageddon or the total collapse of society (we're willing to concede that these require no financial plan), life will continue on after you are gone. And some sad soul -- likely one of your favorite people -- will be stuck with wrapping up your affairs. To make it worse, along the road to this unavoidable end, there's a good chance you'll be incapable of managing your financial affairs. (We're relentless, aren't we?)

But wait! There is good news. It is not difficult to put a few safeguards in place so you won't have to worry about this stuff, and you can go back to skipping through life wearing that smile we love so much.

All you need to do is fill out some paperwork and your financial affairs will be in order when you become incapacitated, whether temporarily (e.g., in a coma) or permanently (e.g., in a coffin). 

Take care of this paperwork today by following this basic outline:

1. Cruise through the rundown of the "Really Important Stuff Worksheet."
We've borrowed this PDF worksheet from the Fool's old personal finance service, TMF Green Light. It's mind-numbingly comprehensive, but don't be overwhelmed. Take it one bite at a time. This outline reveals the high points to make the job go faster. Remember, it's important work, so spend a few minutes a week filling it out until you're done.

2. Gather your papers.
It doesn't do any good to have your affairs in order, all of your important papers filed, and your beneficiaries up-to-date if no one knows where to find your records. The first part of the aptly named "Really Important Stuff Worksheet" lists the documents you'll need to unearth to complete this task. Crack open the filing cabinet and get to it!

3. Be a legal eagle.
Your first step is to record important details about legal documents. If you don't have these documents yet, here's your opportunity to put your estate in working order. The three biggies are:

  • Your will. Your will details exactly what happens to your property (and your minor dependents) when you die. We recommend you see an attorney. It won't cost you too much, and you'll get it done quickly and correctly. If you opt for pre-printed, fill-in-the-blank forms and software, be sure they are current and conform to the laws of your state. And make sure to update your will after major life events (birth, death, marriage, divorce, large inheritance, lottery payoff) and when you move to a different state.
  • Your living will (aka advance medical directive). This says you want the right to die a natural death, free of all costly, extraordinary efforts to keep you alive when your life can only be sustained by artificial means. This document is available free at virtually every hospital in the nation, as well as from estate-planning attorneys.
  • A durable power of attorney and medical power of attorney (aka health-care proxy). These documents allow a person who you select to make decisions on your behalf -- financial and legal in the first case, medical in the second case -- when you are incapacitated. We suggest you see an attorney for these, too.

4. Update your property title and the beneficiary information for your IRA, retirement plan, and insurance policy.
Not everything will pass to your loved ones via a will. Some assets (such as real estate, residences, taxable investment accounts, and checking accounts) may be owned as joint tenancy property. If that's the case, when you die they will pass outside of your will to the joint owner. Assets such as retirement accounts and life insurance policies require a designated beneficiary or two. Those proceeds will go to the designated persons on the owner's death, which means your will won't govern the distribution of these assets -- even if it includes directions about them.

5. Leave a paper trail.
If something happened to you today, would your loved ones know where to find your important paperwork? How to contact your lawyer? Where to find your checking account, IRA, life insurance policy, and safe-deposit box? This uplifting task is the final one to complete on the "Really Important Stuff Worksheet."

For more on getting your estate in order, read about:

Read/Post Comments (7) | Recommend This Article (36)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On November 08, 2011, at 1:34 PM, prginww wrote:

    # 3 is usually best. Doing things legally is always a good idea. we often recommend consumers to obtain a will, or hire an attorney in order to secure the estate legally. The "Your living will" option is always a good idea and will provide details on securing your estate. Dresden @

  • Report this Comment On October 03, 2014, at 2:33 PM, prginww wrote:

    I need to get my estate in order. I just bought a new house so I think it's time to get that done. I'm not sure if I should make a whole new one or just revise my old one though.

  • Report this Comment On October 06, 2014, at 10:20 AM, prginww wrote:

    Read this interview with David Lichtenstein at The Washington Post and see what <a rel="author" href=" Lichtenstein</a> has to sea about real estate investments, his experience from the housing bubble and why he was buying only land and not homes,

  • Report this Comment On October 15, 2014, at 8:35 PM, prginww wrote:

    My mother is terminal and we've been trying to work out all the <a href='' > paperwork</a> after she passes. We're lucky to have a great attorney but I'm always picky and like to learn about whats going on. Thank you for the thoughts, I like to start, that was a nice comment to help me get though today.

  • Report this Comment On March 02, 2015, at 12:48 PM, prginww wrote:

    Number 5 was the biggest eye opener for me. It's interesting read about people who go through all the hassle and trouble of setting up their estates and making a will, but they forget to inform others of where to find the documents or even notify them that they have even completed and filed them. Informing you family and loved ones that all this is completed and filed seems to be the most important because it doesn't do any good if the documents can't be executed when necessary.

  • Report this Comment On April 27, 2016, at 11:43 PM, prginww wrote:

    Well , in my opinion its overrated but thanks anyway for the article !

  • Report this Comment On July 28, 2016, at 11:43 AM, prginww wrote:

    Check out Useful E-book on estate planning.

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