You should always consult an attorney to discuss your particular circumstances, desires, and plans in order to have an estate plan that fully meets your needs. However, as we round into a fifth year since the stock market crashed, I understand that the thought of legal fees is occasionally more intimidating than contemplating your own mortality can be. Even if your estate is not large, you still ought to make your preferences known should something happen causing your death or incapacity. Sometimes even an imperfect estate plan is better than no plan at all. Here are five things you can do without setting foot in an attorney’s office.
1. Buy Life Insurance. Estate planning attorneys will frequently recommend life insurance policies to help cover the cost of estate taxes. Life insurance policies are very useful estate planning tools but they are not designed simply for estate planning. Especially if you are young and healthy, a life insurance policy may provide some security for your spouse and your family if you die unexpectedly and you have a lot of debt or rely on two incomes. Term life insurance policies are especially affordable.
2. Designate Beneficiaries. If you buy or have life insurance, you will designate beneficiaries when you sign up. Additionally, if you have a retirement account at work or otherwise, you generally designate a beneficiary when the account is opened. Now is a good time to review those beneficiary listings to make sure you know who is designated, that person is still your preferred beneficiary, and that the institution still has a beneficiary on record (yes, banks lose this information!). There are other, less common beneficiary listings you can make as well. Most bank accounts can be a “Pay on Death” account, which is exactly the way it sounds. Often, your bank will provide a form upon request. Similarly, if you are the sole owner of your car, you can fill in a “Transfer on Death” form with the DMV. Keep in mind, though, that if most of your assets are transferred through beneficiary designations to a variety of people, creditor problems can arise.
3. Write a Will. Contrary to popular belief, you do not need an attorney to draft a Will. In fact, a handwritten note saying, “I give everything to my spouse, John Smith,” and signed is a valid will. No date or witnesses are required, although both are advisable. There are considerable risks with a handwritten Will, particularly if you want multiple beneficiaries. However, where the person refuses to do an estate plan with an attorney, even with a large estate, a note similar to the above can succeed in allowing the desired (unrelated) beneficiary to inherit the assets. Remember that just because the Will is valid, doesn’t mean it is effective, but it will suffice in an unexpected situation. Don’t forget to name an executor!
4. List your Healthcare Preferences. An Advance Health Care Directive is, essentially, a non-binding list of preferences to inform your loved one(s) who serve in your shoes to make medical decisions the types of decisions you would make if you could. It also designates who should make those decisions for you. A standard form is available from the state of California and from the California Medical Association.
5. Make a List! None of these steps are worth anything if no one knows about them. Additionally, the executor of your estate should be able to find out who your creditors are, where your assets are, and what is generally going on with your estate. A list of passwords, credit cards, accounts, and other information may be vital to your estate plan. Your list should be kept in a safe place, but someone should know where it is just in case.
Although you should still consult an attorney for a full estate plan, the above hints will help ensure that your desires are met, even if you decide to wait.
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