Today’s challenge may not be the most cheerful of the ones to busy yourself with, but estate planning should be high up on your priority list of financial planning, no matter how old or young you are.
Estate planning is about taking the necessary steps now to arrange for what will happen to your inheritance for when you pass away as well as making arrangements for who is to make key decisions in case you no longer can.
There are 6 key parts you should arrange as part of your estate planning, which include:
- A will – a legal document that details what should happen to each of your assets upon your death, providing this is in compliance with local and national legislation. Setting up a trust fund can furthermore be advantageous with regards to taxes.
- A health care proxy / health care power of attorney – somebody assigned to take important healthcare decisions about you should you no longer be able to do so mentally or physically.
- A power of attorney -somebody assigned to the role of making financial and legal decisions, including about your estate should you not be able to do so.
- Beneficiary designations – people who are named on some of your assets, such as a retirement account or certain insurance policies, who are to inherit them if you pass away.
- Guardianship designations – a person or a couple who would look after and raise your children in case something happened to you.
- Letter of intent – a letter in which you express your views on what should happen with your assets and other financial or legal matters when you pass away or are no longer able to make any decisions. Although a letter of intent is not a legal document, it can help a court to understand your wishes should any of the previous documents be ruled invalid for whatever reason.
Today’s challenge is to review any arrangements you already have regarding the above, then to make an appointment with a notary, estate attorney or whoever else would be authorized in your state or country to draft the legal documents described above and discuss the arrangements you want to make in order to get the necessary documents drawn up, signed and legalized.
Although you are unlikely to complete this challenge in one day, once you’ve made an appointment to put together or to update these documents, let us know in the Facebook Group or let the rest of us on Twitter know, using #31DayChallengeToFE.
You can find out more on this topic in Step 56: Estate Planning, one of the 100 Steps to Financial Independence.