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Have you ever asked yourself the “what if” questions? What if something should happen to me today? What if something should happen to my spouse or business partner? What if I have an accident that leaves me incapacitated?
No one likes to think about these questions. However, the answers are very important to your surviving family members. Taking the time to answer those questions can provide peace of mind. It also can mean that your wishes for asset distribution following death will be followed.
If you should die without some form of an estate plan in place, such as a will, your property and other assets will be distributed according to Kentucky state law. Dying without a will is known as dying intestate. If you do not wish to have your assets distributed according to state law, then you will need to develop your own estate plan.
The estate planning process can be quite simple, depending on the size and complexity of your estate. The first step is to get organized by gathering important information and documents. Start by making a list of your assets, or everything that you own. Include all property, including your home, farm property, rental property, and other business assets. Additionally, list other investments and assets, such as stocks, bonds, retirement plans, insurance policies, banking accounts and cash.
As you list your assets, be certain to note how each asset is titled. For example, are you the sole owner, a joint owner with your spouse, or does the asset, such as a life insurance policy, have a specific beneficiary listed?
Once you have completed a list of all assets, make a similar list of all debts owed, such as mortgages, car loans, credit cards, installments debts, etc. If you subtract your total debts from your total assets, the result will be your net worth.
Organizing the paperwork associated with your assets and liabilities will be important to your family members when your estate is settled. As you prepare the list of your assets and debts, also note the locations of important paperwork. You may consider purchasing a small fire proof safe to consolidate all important papers into one place.
Once you have an inventory of your assets, discuss with your spouse and other family members how you would like to distribute your assets to meet your estate-planning objectives. Remember, communication is important throughout the estate planning process. Sharing your estate-planning objectives with family members will help them better understand the choices you make in asset distribution. Often, a spouse or close family member is asked to be the executor of an estate; the executor ensures that your assets are distributed according to your estate plan.
The final step is to work with an attorney to put your plans on paper. Depending on the size of your estate, you may also need to work with your accountant, financial planner or others to develop your complete estate plan. To locate an attorney, talk with friends and family members who may have recently completed an estate plan. Don’t be afraid to interview two or three attorneys to find a lawyer, which meets your specific needs. In addition to helping you put your plans on paper, an attorney will also be able to assist you in understanding and developing other estate planning tools such as power of attorney, trusts, or gifting.
Remember, estate planning is too important of a topic to delay planning.