Family is an important part of many homeowners’ lives, and protecting them at home and beyond is critical. With a good plan in place, homeowners can have protections in place for many different scenarios that could impact financial security. Estate planning in particular is a key component of financial security that any and every homeowner can utilize, because it can help protect owners themselves as well as their families.
Estate planning might seem overwhelming, and it can also be hard to know exactly where to start. Here are a few tips that you can use:
One of the first steps of estate planning is to make sure you understand the . Make sure you have a valid will that documents all of your assets, including property. You’ll also want to make sure to store documents in a secure place, like a safe or safety deposit box, and let key people like your agent — or the person who holds your power of attorney — and your executor know where they are kept. Also keep in mind that all of your legal documents should be prepared by an experienced attorney who is licensed in your area, as laws and requirements vary from state to state.
Here are six things Investopedia recommends including in every estate plan:
1. Will or Trust
In your will, name an executor who can carry out your wishes after you pass away and provide specific notes for them to follow.
2. Durable Power of Attorney
Designate a trusted loved one to handle your affairs if something happens to you and you are unable to make important decisions. A Durable Power of Attorney is something that allows the person who is your agent to make medical decisions on your behalf should you become incapacitated, as well as the associated financial decisions. You can clarify the time that your agent should become the decision maker.
3. Beneficiary Designations
Major financial accounts — like IRAs, 401(k)s and stockholder accounts — typically have online account settings where you can designate a beneficiary (or beneficiaries). Consider setting this up, and also include the designations with the information in your will. Insurance policies generally also include beneficiary information. And keeping everything up to date is important, so remember to make updates if you experience a major life event like marriage, the birth of a child, divorce, the death of a spouse, etc.
5. Guardianship Designations (if applicable)
Perhaps one of the most important steps of estate planning is communicating with your loved ones so that they know and understand your requests. If you are married or have a significant other with whom you live, consider getting on the same page if you aren’t already. Make sure your beneficiaries are informed, because while it isn’t a necessarily pleasant subject to talk about, it is wise to be prepared so that your family and friends are not left scrambling during an emotional time.
Depending on your individual financial situation, you might choose to use an attorney for professional estate planning help as you navigate the process. Ask friends and family for referrals, or search for Accredited Estate Planners® on the National Association of Estate Planners & Councils website.