Have You Taken Care of Your Estate Planning Basics?
Dear Carrie: My husband and I are in our early 40s with two young kids. We know we should have some sort of estate plan, but it seems like such a chore. Any way to keep it simple? -- A Reader
Dear Reader: You're certainly not alone in putting off estate planning. On top of our understandable aversion to facing our own mortality, estate planning conjures up images of mind-boggling detail, long hours with an attorney and high cost. But for most people, creating a basic estate plan can be pretty simple in terms of paperwork. The hard part comes in forcing ourselves to do the upfront thinking and get organized.
On the bright side, this thinking and organization is something we all should do periodically anyway. Plus, an estate plan isn't only about money; it's about protecting your kids and each other. So it really is worth the time and a bit of effort.
Start With Your Financial Situation
Many people think an estate plan is only for the wealthy. But just because you're not worth millions doesn't mean you shouldn't protect what you have. Now is a good time for you and your husband to take financial inventory. Add up what you own, such as your home, business, bank accounts and investment and retirement accounts.
Now subtract what you owe to get an idea of your net worth. You might be surprised at the value of what you have -- and therefore motivated to make sure it passes properly to your heirs. Even if it's simply for each other and your kids, why not make it easier on yourselves and your children if the unexpected occurs?
Agree on the Personal Decisions
How you distribute your assets is only one part of estate planning. Equally important, if not more so, is designating a guardian for your children. If you don't and both you and your spouse die before your children reach the age of majority, the state will choose their guardian for you. You also should think about your preferences for health care and appoint someone to communicate your wishes.in case you become incapacitated. Plus, you'll need someone to make financial decisions.
Prepare Four Basic Documents
Once you know what you want to do, the paperwork can be fairly easy. I always advise consulting with an estate planning attorney, but if your finances are straightforward, your estate plan likely will be as well.