After hearing the words “estate plan,” some people may think of a will or a trust. These are important legal documents, but there is so much more to consider when thinking about estate planning.
When considering how complex estate planning can be, it is understandable that some elements may be overlooked. While the following components are often forgotten, their importance should not be minimized.
We like to think that we’re invulnerable, but we’re all susceptible to facing a serious injury that could leave us incapacitated. Having a living will gives you the power to specify which types of end-of-life medical care you want to receive. Naming a power of attorney allows you to choose someone to make medical and financial decisions on your behalf if you’re unable to do so on your own.
Choosing the best executor
The executor is the person responsible for settling your estate after your death. This is an important role, and it is something that should be carefully considered when naming someone. Some families simply choose their oldest child to serve as the executor of their estate. The oldest child may be the best person for this role, but that isn’t always the case. Rather than defaulting to someone, look for someone with a good temperament and is willing to carry out the responsibilities of the role.
Digital asset planning
As technology advances, our lives are becoming increasingly digitized. While people often remember to include their non-digital assets in their estate plan, many people are forgetting to plan for their digital assets, too. Digital currencies and files that are stored on your computer, including photos and music, should be included in your estate plan. Having a list of passwords that will allow people to access your accounts after your death is also a good idea.
Regularly reviewing beneficiary designations
When you opened a retirement account or purchased a life insurance policy, you were likely prompted to name a beneficiary. These beneficiary designations specify who is entitled to receive the money in your account or the death benefits on an insurance policy if you die. The beneficiary designation will trump what is written in your will, so it is critical that the designation is up to date.
Estate planning is about so much more than simply deciding where your belongings go after you die. A complete estate plan should protect your finances, your family and your independence. Ensuring these four elements are part of your estate plan can help you accomplish those goals.