Though we never like to think about death, it is something that we each need to prepare for. In all likelihood you will be leaving behind something of value, not to mention those you love. What happens to those you love? What happens to everything of value which you have accumulated over the years? We all expect and hope to live long lives, but it is prudent to be prepared for the unpredictable future.
What is Estate Planning?
Some people have wrongly assumed that they don’t need estate planning because they don’t live on an estate. This is a misunderstanding of the phrase estate planning. Estate planning is not about the size of your house. It’s about what happens to any and all assets, whether those be financial accounts or keepsakes. In addition, just because you don’t own real estate, doesn’t mean you don’t need estate planning. You have other interests besides the traditional use of the word estate which need to be dwelt with.
The State of Life for Estate Planning
It is never too early to start planning your estate. This is not only important in case of your death, but also if a medical circumstance were to leave you unable to make decisions. Who would make them for you? Even if a young adult is still on their parents medical insurance, their parents don’t necessarily have power of attorney, unless stated in a legal document. If you just landed your first job, you probably don’t think you have a lot of pass on. However, someone will need to be in charge of any accounts or 401k from your employer. No matter at what stage of lie you are at, if you are over 18, you should do at least some basic estate planning.
Take Inventory of Your Assets
The first step in estate planning is to assemble all relevant information about personal circumstances, assets, and debt.
Here is a list of possible assets:
- Real Estate (home or other real estate ventures)
- Savings (bank accounts, CD’s or money markets
- Investments (stocks, bonds, mutual funds)
- 401(k), IRA, pension and other retirements accounts
- Life insurance policies/annuities
- Ownership in businesses
- Motor vehicles (cars, boats, planes)
- Jewelry
- Other personal property of worth
Make sure to be very thorough while compiling your list. Include anything in your house that you think might be valued over $100. Anything which you don’t catalogue will be left up for grabs. Since this can lead to unpleasant disputes among remaining loved ones, it is best to be as complete as possible.
Take Inventory of Your Debts
In addition to assets, it is important that you list all debts: this includes credit cards, auto loans, mortgages, or any other type of debt. If you are not using a credit card, it is generally a good idea to close them out. This is even more important, as it is less likely that family members will be aware of something not in use. This will protect you from identity theft posthumously.
The Digital Estate
When asked about their digital estate, most people are confused. You will naturally be thinking about children, grandchildren, other loved ones and how they will be taken care of. However, with lives evermore lived online, it is important to plan for the future of your online accounts. You probably have bank accounts, online bill pay, investments, files, and even things like unpublished manuscripts or important photos saved to an online account or the in the cloud. To make sure that none of this is lost, make a list of all your online accounts. Provide passwords and clear, written instructions for a close friend or family member to follow.
If you have not already started planning for your future, you should consider doing so. If you feel unsure about how to proceed, contact us at the TJ Woods Insurance Agency and we’ll help with estate planning, life insurance policies questions, long term care questions, or any other concerns you may have.
