There is not really a one-size-fits-all approach to estate planning. Everyone’s situation is different, and everyone will need different strategies to get the results they want. Below are several things you should consider before you sit down to make or review your plan.
The first step is to make a list of all of your assets. This should not just be things such as your retirement account, your home and your bank account but should also include any sentimental items that your family may want. It should also include any digital assets that you have, which can range from domain names to photographs online, social media and email accounts, and cryptocurrency. Finally, you may not like to think of your pets as assets, but legally, they are considered property in most areas, and you can make provisions for their care in your estate plan.
Your Financial Obligations
You should also think about who you need to take care of financially. In some states, you might not be able to disinherit certain family members beyond a certain amount. If you have a blended family, meaning children from one or more earlier relationships along with a spouse and children from a current relationship, make sure that you structure your plan so that you don’t inadvertently leave someone out. This could be the case if you leave everything to a spouse who then does not pass these assets on to your children from a previous marriage. You may also want to find out whether you should know filial laws within your state. These laws are about whether immediate family members have an obligation to support one another and could impact how you design your estate plan.
You might assume that this involves answering the same questions as thinking about your financial obligations, but there are a few factors you should keep in mind when it comes to beneficiaries. First, your beneficiaries could include people outside your family. You might want to leave your items to close friends or to charity. You also need to think about what to leave to your beneficiaries. For example, a parent does not necessarily have to split an estate equally between their children. You might want to leave more to a child who has fewer financial resources or who has spent several years caregiving for you.
Yet another consideration is how responsible your beneficiary is. While some can receive their inheritance as long as they are no longer minors, they might not be ready to manage a big sum of money at 18 or even 25. In some cases, you might want to create trust with certain conditions. For example, your trust might specify that your child gets distributions when they finish college, get a job, get married, or reach a certain age. If you don’t feel as though a beneficiary will ever be responsible, you could put a trustee permanently in charge of making distributions. If you have a relative who has special needs, you may need to use a trust so that an inheritance does not jeopardize the government aid they might receive.