How to Set Up an Estate So Your Family is Protected After You're Gone

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"Hope for the best, but prepare for the worst," is an adage that's helpful at many points in life. It's easy to put off estate planning, but if you don't do it now, you and your family won't be prepared for the worst. Your family could suffer the consequences.

More than 60 percent of Americans don't have a will or other estate-planning documents. If you're one of them, it's time to make some changes. When you learn how to set up an estate, you're ensuring that your family will be taken care of no matter what.

Ready to prepare for the future with some estate planning essentials? In this guide, we'll teach you everything you need to know about how to set up an estate. Keep reading to learn more!

How to Set Up an Estate: Before You Start

Before you can start setting up the estate itself, there are a few things you should have in order. Here are the preliminary steps to protecting your family.

1. Get Your Family On Board

The first step is to get your family on board with the plan - especially your partner. You may or may not choose to involve any adult children. But if your partner hasn't been very involved in your family's finances before, it's time to teach them what they'll need to know.

If you work with a lawyer, accountant, financial advisor, or another professional in this area, set up a meeting with them and bring your spouse. Introducing your partner will help them feel comfortable having financial conversations with these professionals.

This helps ensure that if anything happens to you, your partner will know the basics of your finances, and who to talk to next. You should also leave them information about passwords and other access they might need for your accounts.

2. Determine Your Family's Needs

Now, you and your spouse can help figure out what your family will need to live comfortably after you're gone.

How much financial security would you like them to have, and how much can you afford to offer them? Figure out what's reasonable for you to give, and help your spouse know what to expect. For example, if you can only leave enough income for them for a few years, they should know so they can prepare to go back to work after that.

3. Get Life Insurance

Life insurance is a great way to help protect your family if you don't have a large estate to leave them. If you don't have life insurance yet, the sooner you get it, the better. Term life insurance is a great choice for many people.

4. Get Your Finances in Order

You don't want to leave a financial mess for your loved ones. Before you create an estate, you should also get your finances organized. This will make your estate planning easier.

Make sure your partner will be able to access your bank account if you're gone. Set up joint accounts as needed. Organize all of your documents in a place where your family can easily access them when you need them.

How to Create an Estate

Now that you've done the prep work, you're ready to create an estate.

1. Speak to an Attorney

Talking to a lawyer is always a good place to start. They'll help you be sure that your estate planning is all correct and legally binding. If you try to do it yourself, you might miss important details.

An attorney can also help you establish a trust, which will govern what happens to your assets. If you have concerns, such as not wanting to directly leave property to your minor children, a trust makes sure that things happen in the best possible way.

2. Establish Power of Attorney

When you assign power of attorney, you're giving someone permission to act on your behalf. This is a very important step, as you don't know what the future holds. If you can't act on your own behalf, someone will need to make the decisions for you.

There are two types of power of attorney. The medical power of attorney allows someone to make decisions about the medical care you're given. The financial power of attorney lets someone handle finances in your name.

This helps ensure your family won't have to go to court to gain the power to make important decisions when you can't make them. You can do power of attorney at the same time that your draft your will.

3. Draft Your Will

For each of these steps, continue to work with your lawyer - they can streamline the process for you. For most lawyers, if you're already drafting a will, they'll add power of attorney for free.

A will is important, whether your estate is large or small. Someone will need to handle your things after you've gone, and a will makes it easier. It also ensures that things happen in the best possible way for your family.

Your will covers a lot. It will name a guardian for your minor children, an executor of your estate, and more. You should also review your will every few years, or every time you have a major life change, such as a divorce.

4. Check Your Beneficiaries

Even if you have a will, your listed beneficiaries will take precedent. Check your accounts and policies to make sure that your beneficiaries match those listed on your will. You don't want to accidentally leave someone like an ex-husband listed as a beneficiary unless you truly want them to receive your estate.

What to Do Next

Once you've taken care of these estate planning essentials, the next step is to make sure you have all your paperwork neatly organized and easy to access. Let your partner or other important people close to you know where to find it. And make sure not to put your will in a safe-deposit box, as it might get sealed for a period of time after your death.

Knowing how to set up an estate means knowing that your family can find peace after you're gone. If you're planning an estate, you're likely in retirement or close to it. Don't miss our guide to the best retirement states here!


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