How do you want to be remembered by your loved ones after you die? Hopefully, by your good deeds and delightful companionship during your life -- and not by the money mess you left in your wake.
Unless you prefer the title of "The Most Awesome Client Ever" to "The Most Awesome Relative Ever," get a will. If you die without a will or a trust (known as dying "intestate" in legal-eagle terms), your state government will step in and deal with your estate as it sees fit. Or, as one Fool wrote to us: "When someone dies intestate, that's lawyerese for, 'Oh boy, let's see how much I can get out of this!'"
When the state takes over, your family sits in limbo as your estate lingers in probate -- possibly for years. (That's a long time for them to stew and sully your memory.) Since you left no directions, your assets are divvied up according to prescribed inheritance formulas. Your Aunt Ida, the animal shelter, and anyone else you wished to leave your money to may never see one penny if they don't fall under the umbrella of generic state estate laws. That's definitely going to leave a mark on your otherwise pristine legacy.
Prepare to die (on paper, at least)
A will and estate plan outlines how to handle your assets (who gets what from your estate); who you want to have care for any minor children (and establishes trusts for them or other beneficiaries, such as charities); who your executors will be; and even care needs for Fido and Fifi. If you have minor children or children from a previous marriage, an estate that may be subject to estate taxes, or have a family owned property or business, you definitely need to have this important document.
And let's be honest: Most importantly, a will makes it a lot easier to threaten the kids if they don't do their chores and ensure that your memory is fondly toasted well into the next century.
To make your passing go as smoothly possible:
See an attorney. Find an attorney who is thoroughly versed in estate planning. (Your divorce lawyer or patent guy probably won't hack it.) Beware of some of the preprinted, fill-in-the-blanks forms and software available for this purpose. These are often out of date and may not conform to the laws of your state.
Review your will every five years at a minimum. Perhaps you've noticed that tax laws tend to change on a regular basis. Those changes can affect your planning documents, so you want to review your will to make sure it is still valid and conforms with state laws. Similarly, life events are money events (people marry, have kids, divorce, die and leave you without a contingent beneficiary) -- your will needs to roll with the punches that life throws at you.
Be aware of what counts as an estate asset for tax purposes when you die. Basically, that's everything you own, including the face value of life insurance policies and the current value of all your retirement plans. How these things are taxed depends on who (e.g. spouse, child, charity) is getting what (e.g. real estate, family jewels), where it comes from (e.g. brokerage, trust, bank account) and how much. If there are ways to ensure your heirs aren't slapped with avoidable tax penalties, set up those mechanisms now.
Get the proper papers for other unpleasant events. If you become incapacitated, either mentally or physically, a durable power of attorney and medical power of attorney (two of a handful of important estate-related documents you need) allow the person you select to make decisions on your behalf. Also, execute a living will. This document says you want the right to die a natural death free of all costly, extraordinary efforts to maintain your life by artificial means. The form is free at virtually every hospital in the nation.
Make sure that the right people know where to find these documents. Remember, it's a question of when (not if) they'll be needed.
Find good help
Need help lining up your ducks and turning yourself into your brood's favorite relative? Ask friends, family, colleagues, with-it strangers if they can recommend an estate attorney. Interview a few and do the proper background check (here's how).
If you need assistance getting your financial life in order before you write your will, seek the assistance of a fee-only financial planner -- one who does not make their money via commissions (e.g. selling you products). (We've been pointing people to the affordable, pay-as-you-go advisors at the Garrett Planning Network for years. Now they're offering a limited-time 10% discount to Motley Fool readers. Click on this map to find one near you -- just look for the Fool logo.)
For more on preparing for the great unknown -- the one you can enjoy in life, that is -- see:
Still up for grabs in Dayana Yochim's estate: A small collection of creepy doll hands, a box of cassette tapes of Lawrence, Kansas-based bands from the late '80s/early '90s, and some leftover pasta from last week. The Fool's disclosure policy is immortal, but still regularly reviewed by lawyers.