You may think that the only people who should care about estate planning are the lucky few with six- or seven-digit incomes, a lavish mansion in an exclusive suburb and a flashy sports car or two in the driveway. In fact, estate planning is a sound idea for anyone who wants to ensure that their assets and valuable possessions go to individuals whom they specify. What you own, even if it’s modest, is important and deserves to be treated as such.
There are other reasons why estate planning is a smart thing to do in advance of your death or in case you are unable to manage your business or financial affairs. Making your wishes known formally and in writing might save your heirs from dealing with all kinds of red tape, delays, taxes and other bothersome headaches.
Creating a comprehensive inventory of what you own is a good first step in estate planning. When you make a list of your assets, you may discover that you own much more than you thought. Include tangible assets like real estate, vehicles and collectibles. You should also list intangible assets such as savings and checking accounts, stocks, retirement plans, and life insurance policies. Then estimate the value of each item. Home appraisals and financial statements can help.
Additional estate planning steps to take
- Make sure that your family is adequately provided for. Is the amount of life insurance you have sufficient? Who will be the guardian of your children? Put everything in writing regarding their care.
- Set up directives such as a trust, medical care directive, durable financial power of attorney and limited power of attorney.
- Think carefully about who you want your beneficiaries to be.
- Be aware of Washington’s estate tax laws. An experienced attorney can help you with that.
- Look over your estate plan periodically, especially after a major life event such as getting married or divorced.
Estate planning can be complicated even if your estate is not large. You’ll want everything done by the book, so don’t hesitate to ask for professional guidance.