You don’t have to be rich. Six estate planning tips for the 99%.

05/20/2016
Becky Niiya

The surprising revelation that Prince may have died without a will in place can serve as a real-world example of the importance of planning for the unexpected.

People don’t have to be rich with a music empire and massive mansion to think about estate planning – the fancy legal term for what happens to someone’s assets when they die. Even those with modest assets and young adults need to have a plan in place for their more humble estates.

It’s something everyone should consider, not only for their own peace of mind, but also to provide security for loved ones left behind. Yet, an online Harris Poll from 2014 revealed that 64 percent of Americans ages 18 and older do not have a will. And 55 percent of Americans with children do not have a will.(1)

Without a formal document, such as a will, that specifies an individual’s wishes, assets will be distributed according to state laws. A court’s wishes could differ from those of the deceased. The state could even decide guardianship for children. Planning ahead and setting up trusts and tax-reduction plans in advance can also help beneficiaries reduce their tax burden.

Estate planning involves not only passing on assets, such as real estate, personal property, and financial assets, but also planning for others to make decisions on the individual’s behalf for either while they are living or after they die. It may sound complicated, but it doesn’t have to be – especially if you prepare in advance.

Laura Tarbox, an independent registered investment advisor and member of TD Ameritrade Institutional’s Advisor Panel, breaks it down with six estate planning tips:

  • Something is better than nothing. Don’t worry about having every minor detail perfectly resolved before drafting a will and/or living trust as part of a basic estate plan. It’s flexible and can be changed.
  • Enlist the experts. An experienced attorney can draw up a will and other basics. Also, a financial professional could review and help explain implications of the estate plan.
  • Carefully consider who is named as executor and/or successor trustee.
  • Assign both financial and healthcare powers of attorney.
  • Name primary and secondary beneficiaries, including charities, for retirement and insurance accounts because these will pass outside of any trust that may be established.
  • Be sure to keep the plan current. Review the plan every two to three years or following a key life change.

With the responsibilities and demands of daily life, it can be tempting to put estate planning off for another day. Planning for the future became a priority for Todd Luther when he first became a parent.The HR professional at TD Ameritrade and his wife have four kids between them and are in the process of adopting a daughter.

“While it’s not fun thinking about worst case scenarios, my wife and I take comfort in knowing our children would be taken care of as we’ve outlined in our estate plan,” Luther said. “With young children depending on us, we’ve taken action to create and regularly update a comprehensive plan to properly care for our family and assets.”

Learn more about estate planning basics from TD Ameritrade.

Image via Dreamstime.com

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