Let’s face it: mortality is hard to think about and death is impossible to plan for. What is doable, however, is getting affairs and assets in order to prevent loved ones from inheriting a headache and legal fees in the event of an incident. Currently, 17% of adults don’t think they need a will whatsoever, operating under the assumption that estate planning is a practice for only the very wealthy. The reality is, no matter how few assets it seems someone owns, completing a few pieces of paperwork now can make a world of difference in the future. The estate planning process has developed a reputation as being tedious and costly, and rightfully so.
Attorneys have been known to charge as much as $3,000 for their assistance. With that said, there are certainly cost-effective ways for young adults and young couples to maintain control of their wealth. This article will highlight four estate planning tips for young couples looking to start the estate planning process without breaking the bank.
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- Take Detailed Inventory
While estate planning can seem overwhelming, taking inventory of assets is a great place to start.
Young people, in particular, get lulled into a sense of security, and assume they have plenty of time to get affairs in order. In addition, many incorrectly believe that they don’t have enough assets to warrant a Will or trust. However, estate planning has little to do with net worth - it is specifically to take care of the loved ones who will handle these affairs. Estate planning now can help alleviate the probate process for beneficiaries looking to unlock access to the estate, no matter how small.
With that said, taking inventory of all assets is a crucial first step, and a logical place to start. Find some time to sit down and think through any belongings of $100 or more in value, both inside and outside of the home, and begin listing them out.
- Identify Your Beneficiaries
Once the exhaustive list of assets is complete, it’s important to determine how these assets should be divvied up between family, friends, churches, or charities. Planning ahead to determine who inherits which assets ensures that nothing gets misplaced or mishandled, and that anything of any value ends up in the intended hands.
Although tedious, this step will go a long way to limit the court’s involvement as assets are allocated, and prevent family and friends from jumping through unnecessary hurdles in the process. Determining beneficiaries ensures loved ones are provided for, and grants them access to specific assets in the event of an incident.
- Draft a Will
Drafting a Will is perhaps the most important step in the estate planning process, and should be done by everyone over the age of eighteen. A Will serves as the guidelines for how assets are to be allocated, preventing any potential disputes.
Not only does a Will simplify the distribution of assets in the event of death or incapacitation, but it also provides marching orders to the survivors. A Will can detail childcare, petcare, or any additional instructions or specifications.
Without a Will in place, assets will simply be allocated according to state law - not according to your wishes. Simply drafting a Will prevents the state from making decisions about how your estate is divvied up.
Once the assets and beneficiaries are listed, a Will should be drafted immediately. Life is unpredictable. A Will ensures family, friends, and charities are cared for should an incident occur.
- Establish & Maintain Open Communication
Establishing open and consistent lines of communication between family and friends is essential while estate planning. Communication is often overlooked and underrated, but is an incredibly effective way to avoid conflict and disagreement.
It’s important to get everyone on the same page, both literally and figuratively, to prevent any legal or familial disputes regarding the estate.
A Few Minutes Now Can Save Hours and Thousands of Dollars Later
Despite 76% of Americans claiming to understand the importance of estate planning, only 42% of Americans actually have a will or a living trust. What’s more, that number dips to 36% for adults with young children. Estate planning ensures valuable assets end up in the right hands following an unforeseen incident, and that loved ones are not left with any additional financial or legal burdens.
Procrastination is the first hurdle to jump. Failure to get the estate planning process started can lead to family disputes, misappropriated assets, court litigations and mounting tax dollars. Listing assets and beneficiaries, as well as drafting a letter of intent, are great places to start, and can help simplify the process down the line.
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