No one wants to think about his or her own death, but ultimately we all have to come to terms with our own mortality. And just as important as it is to face the realities of life, so are planning ahead financially for yourself and your loved ones.
The untimely death of Mexican-American singer Jenni Rivera, who leaves behind five children, has prompted many to consider their final plans. Death is already an overwhelming time in a family, having them have to manage your finances and make important decisions on your behalf can make things only more difficult and stressful. Whether you're single, married, divorced or widowed, estate planning is an essential part of your financial life.
Here’s what you need to do:
Not only will you have peace of mind but you can prevent your assets from falling into the wrong hands; creditors claiming you owe them money, the IRS, or that “aunt” you never heard of. A little planning now will help ensure your loved ones are cared for and there’s no confusion as to what your wishes are.
Get a Will
Maybe you've told your sister or your husband that they'll get everything you own but unless you've established a will and spell it out clearly, you're leaving those decisions up to someone else, usually someone who doesn’t know you. A will is especially important if you have children or dependents. Who will care for your child in the event of your death? You and your spouse may have strong, opposing opinions so talking about it and making a rational choice is important. This is the purpose of a will.
And A Living Will
Have you thought about what would happen to you if you were to get sick or incapacitated? What are your thoughts on life support? “We're reminded of the case of Terri Schiavo, the young woman whose parents and husband fought over whether or not to keep her on life support,” says estate planning lawyer, Jason Pereira. “Your choice on how you would want to carry on your life needs to be expressed in a living will to avoid these types of situations.”
Consider Your Resting Place
Estate planning also lets you focus on things like whether you'll be buried or cremated and the location of your site. If you have a preference as to how you’d like to “live on” after death, there’s an opportunity for you to make that a part of your estate planning. Let your spouse know that you’d prefer to be cremated and why it’s important to you. Maybe there’s a special place where your family has been laid to rest and you assume you’ll be there too. Make if official and take out the guesswork.
Online tools like legaldocs.com and legalzoom.com can help you get familiar with legal jargon and the estate planning process but nothing beats speaking with an attorney. Pereira suggests using online tools as a basic guide, “having something set in place is better than not doing anything at all, but an attorney specializing in estate planning will help navigate through loopholes and state laws that aren’t always updated on legal sites.”
Update Beneficiary Information
Make sure that all of your beneficiaries are named correctly on all documents and assets (retirement accounts, life insurance, etc.) Loved ones who try to change this information after a death will find it difficult and time-consuming, maybe even impossible. Also, be sure to update your documents every couple of years. Factors like receiving an inheritance and having another child are important life changes that need to be considered. Unfortunately, this is a common mistake when it comes to estate planning.
Learn How to Manage Your Accounts
You should have an active role in your finances at all times. It may be intimidating and overwhelming but knowing where your assets are and how to handle them will help you make better decisions in the future and give you more control of your life.
Talk About It
Talking about death with your loved ones is uncomfortable and it's easy to understand why estate planning may not be the topic of choice at a dinner party but the conversation needs to be had. Using a recent news story, like Jenni’s tragic death, can be an ice-breaker to an awkward conversation. The clearer you are with your family regarding your wishes, the easier it is on everyone.