8 Essential Estate Planning Tips You Need to Know

8 Essential Estate Planning Tips You Need to Know

More than half of all Australians don’t have a will. While we don’t like to think about these things, not having a will can cause a lot of issues in case of a tragedy. The death of parents can leave children without a guardian. Assets in a blended family can be distributed in an unsatisfying way. And if you’re hurt but not dead, people can make all sorts of medical decisions you might not agree with.

One way to ensure everything you leave behind is well taken care of is to get into estate planning. Everyone, no matter how many assets you have, needs to have a basic estate plan. Don’t know where to start with your research? Here are a few basic estate planning tips to keep in mind. 8 essential estate planning tips you need to know.

1. Handle the guardianship of minors

If both parents die, who will raise your kids? How will your life insurance payout? Unless you have very trustworthy relatives, it’s best to handle the guardianship of your kids and place the money in a trust. This way, everyone will be taken care of and you can rest easy knowing your kids and money are safe.

2. Take care of your will

A will is one of the most important parts of your estate planning strategy. It determines who gets your assets like your home, car, bank accounts and personal possessions.

3. Form your trust

A living trust serves a dual purpose: It gives you an opportunity to pass on assets and allows trusting people to manage your affairs in case of an accident. Your trust can get your house, car, personal possessions, bank accounts and other assets. The best idea is to make yourself a trustee, but also appoint some else to take over the responsibilities if you can’t manage your own possessions. This person will be an extension of you until you die.

4. Choose the right executor

Once you have your will drawn, you’ll need to find a responsible person to carry it out. Simple wills can be handled by relatives or friends, but more complex ones will require professional help. Instead of hoping everything will go well, you can hire experienced wills and estate lawyers to assist in this process and ensure that everyone is following the legal requirements to fulfil your wishes.

5. Handle your medical decisions

If you can’t make your medical decisions, you need to name someone to make them for you. Doctors like to have someone who has the power to make all the important decisions to avoid conflict. Your living will (aka advance healthcare directive) provides guidance to the person making medical decisions. For instance, it explains what to do in case you need to be kept on a ventilator or feeding tubes. It’s smart to discuss these scenarios with whoever has the medical power of attorney.

6. Come up with a tax plan

Wealthy people who face federal and state estate taxes will require planning to minimize their taxes (best to leave to a professional). Most countries and states have their own limits that dictate when federal estate taxes kick in. Less wealthy will need to consider that heirs need to file for income return, so make sure to leave all documentation available.

7. Name your beneficiaries

All things like retirement accounts, pensions and life insurance are not passed through a will, but through beneficiary designations. Therefore, it’s important to keep these up-to-date or someone like your ex-spouse might inherit everything. Some joint assets automatically pass to the surviving partner, but some might not so make sure to check that out.

8. Plan for unexpected things

In life, you always need to have a plan B, but that works for death too. All estate experts agree that you should have a contingency plan in estate documents that will help everyone in case of an unlikely scenario (trustees dying before the author of the plan). Since it doesn’t cost extra to add a few sentences to the estate planning documents, you can be pretty specific. Life changes, so you need to be prepared for everything if you want to know your possessions are in the right hands.

You don’t have to be a Richie Rich to have a good estate planning strategy. Go into this with a clear plan that will reflect your legacy and who you were as a person, and you will certainly be proud of what you’ve left behind.