Your estate includes every asset you own: tangible ones like your car, house, furniture and other possessions, as well as your life insurance policy and any money left in your bank, retirement or investment accounts. Unfortunately, your estate also includes accrued debts like your mortgage, credit card balance and other unpaid loans.
When Should You Start Estate Planning?
Death is inevitable, and you can’t bring your assets, debt or belongings with you when the time comes. If you don’t plan your estate before your time comes, you can leave problems for your surviving loved ones.
The best time to start planning for the future is now.
Why Should You Create an Estate Plan?
Estate planning is more than just drafting a will or creating a trust to pass along your belongings after your death. You also need to plan for scenarios in which you may become incapacitated or unable to make decisions on your own, as in the cases of dementia or coma.
Here are some things to consider:
- An estate plan helps you protect yourself. You need to protect your future in case you become incapacitated and have continuing financial and medical care needs. Take the time to express your wishes now so your loved ones know what to do if you lose the ability to speak for yourself.
- An estate plan protects your beneficiaries. Without a will in place, the court determines who gets your assets. This process takes time and money, and the court will not have a list of your wishes to take into account. Instead, it will distribute your estate among your living relatives. A will allows you to bequeath your sentimental assets to special people in your life. You can also use it to leave assets to individuals, businesses, or charities outside your family.
Note: A will can only administrate the distribution of assets that are not otherwise allocated through a beneficiary designation. So, if you set a beneficiary for your TSP on TSP.gov, naming a different beneficiary in your will won’t override your previous selection.
- An estate plan protects your children. You can name a guardian who will care for your children if you die before they turn 18 – or indefinitely if you have a child who requires continuous care. Unless you name a guardian, the court will choose who will continue to raise your children.
- An estate plan helps prevent family conflict. You can lay out who will receive assets and when and how they’ll receive them after your death. A detailed plan prevents conflict among your loved ones after your death because no one can claim they knew your wishes best to alter the distribution of your assets.
How Do You Create an Estate Plan?
At the simplest level, you can plan your estate in four steps.
- Inventory your assets. Create a list of everything you own. Make sure you include these assets:
- House, land and other real property
- Cars, boats and other vehicles
- Jewelry, furniture, valuables and collectibles
- Bank, investment and retirement accounts
- Life insurance policies
- Health savings accounts
From there, add everything up to estimate the total value of your estate.
- Account for your family’s needs. Create a plan for all scenarios at every stage of your life. Decide who could stand in as your children’s guardian if you and your spouse die while your children are young or become unable to care for them due to injury, illness or imprisonment. Make a plan to help your spouse make mortgage payments if you die after purchasing a home together. Name the beneficiaries for your retirement and other investment accounts if you die before using all your savings.
- Keep a list of accounts that have designated beneficiaries, including life insurance, retirement plans and annuities. Revisit your selection any time you experience a major life change like a marriage, divorce, birth, death, new job or property acquisition.
- Ask an estate lawyer to help you put all your wishes in writing. An experienced estate planning attorney can help you draw up your documents. You can get free help from your base legal office if you’re a current service member.
What Documents Do You Need?
Make sure your estate plan includes documents to cover varying scenarios. Include these three essential documents:
- Health Care Proxy and Living Will: These documents allow you to decide what medical and other care you’ll receive if you become incapacitated or too sick to express your wishes. You can outline the details for medical treatment in various scenarios with your living will and designate a healthcare proxy who you can make decisions about your health care on your behalf.
- Durable or Springing Power of Attorney: You can designate a person to take care of your finances at any point, or act on your behalf if you cannot make decisions yourself. A durable power of attorney must act in your financial best interest and does not retain any control after your death. A springing power of attorney only becomes effective upon a specific event, such as a coma, disappearance or incarceration.
- Last Will and Testament: This document outlines who receives your assets upon your death and appoints a guardian for any minor children or children who require continuing care. If you don’t have a will, the court will decide how to divvy up your assets and who will look after your children. You can also name an executor for the will who will carry out the will’s instructions and any end-of-life tasks.
How Navy Mutual Can Help
Estate planning can be complicated, but Navy Mutual can help. Download our estate planning personal log here to keep all your estate planning notes in one place. Or click here to discuss your life insurance options with a Navy Mutual representative. You can also call us at 800-628-6011.
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