According to Planned Giving, 68% of Americans die without a valid will. Preparing for retirement can bring up difficult discussions about end-of-life decisions.
Putting off estate planning can leave your loved ones grieving your passing and dealing with a legal headache. And making an estate plan isn’t just for wealthy people.
Here are a few reasons why people put it off and how you can finally tackle estate planning once and for all.
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1. Don’t like to talk about death
If you don’t like talking about death, you aren’t alone. Even though 92% of Americans say it’s important to talk to your loved ones about end-of-life care, only 32% have actually followed through and had the tough conversations.
However, when you don’t talk about death or final requests, you may not be in a position to make those decisions when the time comes.
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2. I’ll have time to do it later
Life isn't promised to anyone. It can be difficult to face the end of your own existence, but kicking the can down the road doesn't change the reality of settling your estate.
It's best to make your estate plan when you are in good health and of sound mind — to avoid rash or emotional decisions.
3. My estate isn’t big enough
You may be under the impression that you need millions of dollars to warrant an estate plan. That’s simply not true.
Estate planning isn’t just about dictating where your money goes when you die. It also includes making medical directives and assigning someone to make decisions for you, if you are no longer able to.
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4. Heirs can take care of it
Leaving the work for your heirs to do may sound like the easy way out. Letting them figure out who gets what seems easier than making those decisions.
Unfortunately, this means that your estate will land in probate court and could take years to sort out. Ultimately what you have left your loved ones is a legal headache to sort through.
So here are the steps you need to take now.
5. Make a will
First things first, write a will. A will won’t help your heirs avoid estate taxes or probate court, but it will allow you to control how you want your assets to be distributed. In most states, a valid will must be:
- Written or typed
- Signed by the testator (the person who is making the will)
- Signed by two witnesses
- Notarized
Other states may require more or less depending on the local laws. There are a number of websites such as NOLO.com that have DIY packages for creating a will.
6. Form a trust
A trust is similar to a will in that it sets out what happens to your assets after you die. However, a trust also allows you to legally transfer your assets upon your death, avoiding the need to go through probate court.
By having your assets inside a trust, your final wishes can be carried out quickly and simply. These structures can also prevent fights among family members, as trusts cannot be contested in courts like a will.
Make Money: 8 things to do if you're barely scraping by financially 7. Create power of attorney
If you are unable to make decisions for physical or mental reasons, a power of attorney allows someone else of your choosing to make those choices on your behalf.
If you don't have a power of attorney in place beforehand, a loved one will have to seek a court approval to have one extended.
8. Fill out advance health care directives
An advance health care directive says specifically how much medical intervention you want during major health issues. It also appoints a proxy to make those decisions on your behalf.
For example, if you are permanently unconscious, you may want to stop all care. If you have stated this in an advance directive, your proxy will not need to guess what you would want.
9. Assign beneficiaries
If you have assets, you need to decide who will receive these when you die. These people or entities are called beneficiaries.
They can be anyone you choose, often children, partners, close friends, or charities. Check your local laws as you may be required to list a legal spouse as a beneficiary.
And don’t forget to name beneficiaries for your investments, such as mutual funds and retirement savings accounts.
Are you a senior? Avoid these 6 sneaky money mistakes 10. Review regularly
It’s not enough to just create the estate plan; you need to regularly review your documents and make changes if needed.
It’s courteous to let your executor and beneficiaries know your wishes beforehand so they will know what to do upon your passing. It can also help reduce arguments or disputes among heirs after your death.
Bottom line
Without proper planning, your estate can be susceptible to taxes, probate court, and creditors. If you’re overwhelmed by the process, start with getting a valid will.
If you have been working hard to build wealth , estate planning is the best way to ensure your wishes are carried out exactly as you’d intended.
Money tips that can work for everyone
No matter what your bank account balance is, there's always an opportunity to optimize and improve your finances. Here's a quick checklist of things you can look at today.
Focus on paying off your debt. Debt can hold you back from making progress with your overall financial well-being. Aside from cutting expenses, there are tools that can help you pay off debt faster like balance transfer credit cards and debt counseling.
Earning extra income can give you breathing room. If finances are tight, earning some extra money to supplement your income can make a huge difference. A new job is one option to consider, but if you're not ready to make a big change or already retired, a part-time side job could be a better choice.
Cut your expenses. It sounds painful and so not fun, but it doesn't have to be. Take a look at your biggest expenses because that's where you'll probably find the biggest savings. For example, auto insurance rates have been soaring so shopping around for a new insurance company can be the fastest way to cut your bill. Also, look for ways to cut your grocery bill (despite rising inflation).
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