Why You Need An Estate Plan, Even With Few Assets

Posted on: 30 June 2018

Many people don't understand why estate planning is so important, even when you own very few assets. An estate plan not only includes information about asset distribution, but can help give your opinion on end of life decisions when you are not mentally able to. Here are a few steps every person should take when planning their estate.

Create A Will To Clarify Wishes

If you only do one thing for an estate plan, you should at least make a will. The main thing you want to list is the name of the person that will be your estate's executor after you pass away. If not, the state will assign somebody to this role that you may not want to have it.

For people that do want to dig a bit deeper into what they can do with a will, know that you can make requests about how to handle your funeral. You can also start assigning property to certain people. For example, you may want to leave your car or house to someone specific.

Update Insurance Policies To Verify Beneficiaries

Be aware that the one thing a will does not dictate is who will receive benefits from your insurance policies. This was decided when you purchased the policy and listed who the beneficiary is for that specific policy. If you want to change who receives the money, you must contact your insurance provider.

Avoid Asset Ownership Confusion

Sometimes assets have joint ownership between multiple people. This could include a home, car, or bank account where two people are listed as owners. Any of these items with joint ownership cannot be passed on to another person through a will, since they automatically go to the person listed as a joint owner.

Some people use joint ownership to pass on items that are not through a will. This is because wills become public record, and there may be a preference to hide who you gave the money in a bank account to. Instead, you can list another person on the account and they'll have ownership without going through probate. You can do the same thing with a home or other property that you own.

List End-of-Life Directives

If you have preferences about how you want your life to be handled while you are on life support, or any other type of medical decision, you can list these in an estate plan. You can even assign a person to make decisions on your behalf.

Contact local estate planning services for more help.