I often get asked what the most basic “must dos” or “must haves” are in estate planning. Here is the answer:
- Talk to an estate planning attorney. Most, like me, offer free consultations, so you don’t have to spend anything but time, and then at least you’ll know and understand your need and risks, and be able to make informed decisions
- Talk to a financial advisor. See above – you only lose your time, and if you find a reputable one (your estate planning attorney should know several fantastic ones, as I do), then you can make sure that as you grow older, you are working toward your financial goals.
Those two items will give you all the information you need. But more specifically:
- If you have children, decide on and formally nominate a guardian to care for them if you are unable to. If you don’t decide? A judge – a stranger – will make the decision for you.
- Create a will or trust. If you don’t decide who will get your stuff, someone else will. You’ll also pay a lot of money for the privilege. Again, talking to an estate planning attorney to find out your risks and options costs nothing. Why remain uninformed?
- Make sure you have enough life insurance. What you think of as “enough” and what is really and truly “enough” should your spouse die may be entirely different amounts. If one spouse doesn’t work, and the working spouse dies, wouldn’t you want to have enough life insurance to allow the survivor to take time to grieve, take care of the children, and then think about work, instead of having to worry about finding work right away?
- Make sure your retirement and life insurance beneficiaries are always up to date. If you’ve been married for 20 years and your life insurance names your girlfriend of 25 years ago when you pass away? Then your girlfriend gets the money and your wife doesn’t. Is that what you want?
- Make sure you have long-term care insurance if you need it. A financial advisor can help you to decide on this, and the earlier you get it, the cheaper it is.
- Make sure both spouses know and understand the family finances, even if one spouse does the day-to-day management. Do not get caught in a situation where one spouse dies and the survivor does not even know what accounts exist.
- On that note, put your paperwork in order, or at least in one place. Even if it’s disorganized in a drawer, make sure all the important paperwork, account statements, estate plan, life insurance, etc. is all in one place and easy to find. Should you pass away, your family will be going through a rough enough time as it is – don’t make it worse by leaving a scattered financial life.
None of these items are difficult or even time-consuming, but they mean everything in the world to your family should something happen to you. What are you waiting for?