The whole point of
estate
planning is to leave your children and spouse in as strong a
position as possible in case you die. But that doesn'tmean that
those without a spouse or children need not bother.
On the contrary, settling all of your personal matters will prove
to be quite burdensome for whatever friend or relative takes on the
task. You may be around another 50 years, or you may be gone
tomorrow, so you may as well set up a plan right now. As the
Beatles once sang "Tomorrow Never Knows."
Would That There's a Will
1. The first, and most crucial step is to establish a
will.
It should spell out -- in very explicit detail -- how you want your
estate to be handled, from the funeral ceremony, to how you want
your assets distributed. Your will should list every account number
representing all of your investments and loans.
You can go to an attorney that can provide clear counsel as to how
to structure a will that is right for your situation. Or you can go
to web sites such as
Nolo.com
or
Legalzoom.com
to download the right forms, which start at around $40. Remember
that you'll need to get it notarized, and should make sure that
someone has an easily-accessed copy.
2. Identify a Power of Attorney.
Well before you spin off this mortal coil, you may become
incapacitated. In that event, a friend or family member will need
to be entrusted to oversee your care and your financial matters.
If you have located the right person, sit down with them and
discuss your intentions, giving them the opportunity to decline the
role. It's a big responsibility, and not for everyone. This person
will be entrusted to act in your best financial interest at all
times, so be sure that they have the background and experience to
do so.
3. Draw up a list of beneficiaries.
This is a good time to start getting to know well-run charities. In
my experience, some charities are very effective at making sure
that donated funds are truly directed to helping the cause. Other
charities seem to be a vehicle for enriching its key executives.
(As a personal rule of thumb, I ask for executive non-compensation
at non-profits. If the key players are making $200,000 to $300,000
a year, then I move on to another charity).
Once you've found the right charities, figure out how you'd like to
split the proceeds of your estate with relatives such as nieces and
nephews and those charities.
4. Keep it simple and up-to-date.
A friend of mine has spent the last six months sorting out the
estate of a sibling that suddenly died with vague estate
instructions. My friend has been dealing with a range of lawyers,
bankers and
IRS
agents to sort through all of the assets and liabilities.
His sibling failed to keep his will current, and my friend is now
pulling his hair out trying to make sure that all is handled
correctly. You should look at your will once a year, and have it
re-notarized every five years, to be sure it's up-to-date.
5. Continually re-assess your needs.
As you age, the amount of money you'll need to live comfortably
until life's end may diminish. You may soon have more than you'll
ever really need. For example, someone in their 70's with several
million dollars in assets is unlikely to ever run out. That's why
some people start to wind down their estate while they're still
alive.
You can give up to $13,000 to friends or family without paying any
taxes. You can begin to make automatic payments to a favorite
charity. Some people own several homes for investment purposes. For
the sake of simplicity, it may be wise for someone that is elderly
to start selling some of those properties so that the eventual
settling of the estate becomes a far simpler process.
Facing theses issues is unpleasant, which is why most of us put
them off. Yet a little upfront effort now can make for a much
easier path for someone else later on. Once you have a plan in
place, you only need to update every half-decade or so (though as
mentioned earlier, you should look at it at least once a year to
see if changes are needed). This all provides peace of mind as you
face the unknowable future.