While none of us likes to think about our eventual passing, it’s an unfortunate fact of life that all of us need to prepare for in advance. And of course, because life can be so uncertain, it’s never too early to start making plans for what will be done with your financial assets and personal belongings after your death.
By developing an estate plan, when you do pass away, your preliminary planning can make an already trying situation much less stressful for your loved ones. In addition, doing so can help you ensure that your personal preferences — rather than state laws or probate courts — guide the important decisions about asset distribution that can have big impacts on your family’s financial well-being after you’re gone.
8 things to include on your estate planning checklist
When preparing your estate plan — and reviewing it from time to time to ensure that it’s up to date — make sure that it includes these eight critical estate planning documents and other top items of consideration:
- Will and testament — This document provides a summary of your assets and outlines how you would like for them to be distributed in the wake of your death. It also names the person/people you would like to serve as the legal guardian(s) of any minor children and pets you may have, plus identifies the person who you’d like to oversee your estate administration process.
- Advance directive/healthcare power of attorney (HPOA) — An advance directive is a legal document that clarifies your medical-care preferences during situations in which you become incapacitated or otherwise unable to share your choices with healthcare providers. For example, it outlines your positions on initiating and continuing life support in a range of intensive medical scenarios, and it shares the levels of medical intervention you’d like in specific circumstances. A related document, a healthcare power of attorney (HPOA), names a person you authorize to make medical decisions for you in cases where you’re not able to do so yourself.
- Financial power of attorney (FPOA) — A financial power of attorney, on the other hand, is a document that enables a person of your choice to make financial decisions on your behalf should you become incapacitated or otherwise unable to do so. This can be an important document to have in place, as it helps ensure that someone you trust can step in and pay your bills and take care of your other financial responsibilities when you’re not able to tend to them.
- Beneficiaries — When you take out a life insurance policy or open a retirement savings account, as part of the process, you’ll typically be asked to name the beneficiaries you’d like to receive the funds from the policy or account should you pass away. But because life circumstances can change, it’s important to review these named beneficiaries from time to time and update them as needed. Life changes such as marriages, divorces, births and deaths in the family can necessitate a need to rethink your beneficiary choices and alter them should you see fit.
- Trusts — Especially worth considering if you have a high net worth, trusts can offer you a greater level of control of the assets you leave behind to heirs and the terms under which they’re distributed to them. Trusts can also help your heirs avoid the probate court process, resulting in often-significant savings of time, hassles, lawyers’ fees and court costs.
- Taxable events — By working with a tax professional during the estate planning process, you can lower the impacts that taxes can have on the inheritance you leave behind for your heirs. With careful planning, the proportion of the assets you leave behind that are susceptible to estate taxes, income taxes and capital gains taxes can be minimized — and the benefits you leave to your heirs can be maximized.
- Philanthropy — If you would like to leave a lasting impact on your community and even the world in the wake of your passing, estate planning can offer a way to ensure that favorite charitable organizations receive the benefits of your philanthropic legacy. And beyond making a difference for the causes that are most important to you, when done properly, charitable giving can also generate valuable tax benefits for your estate.
- Professional assistance — Because many of the elements of estate planning can be challenging to comprehend and complicated to implement, especially for those who aren’t trained to handle them, it’s a good idea to consult with a financial professional who specializes in estate planning. Doing so can help you ensure that all parts of your estate plan are implemented properly, potentially avoiding problems that can derail your end-of-life goals and create unintended complications in the wake of your passing.
Proudly serving South Carolina since 1933, Arthur State Bank offers accounts and services to meet a variety of financial needs. To help you achieve all your financial goals, the bank offers in-person service as well as a range of convenient digital solutions. To learn how Arthur State Bank can help you with banking needs ranging from checking and savings to retirement accounts, mortgages, other personal loans and more, visit arthurstatebank.com.
