Top tips for effective estate planning

Death.

It’s not something that most us like to think about, let alone plan for.

That said, it’s the only certainty in life —so planning ahead for what should happen to our estate when we die is one of the most helpful things we can do for those we leave behind.

Effective estate planning ensures the maximum financial benefit is realized for a person’s family and loved ones after death. It means that taxes and other expenses can be properly researched and dealt with, rather than irreversible decisions being made when emotions are running high.

When it comes to estate planning, leaving a will is essential. There are two different types of will that people should consider to protect their assets and ensure their loved ones are properly considered after death — a will and a living will.

The difference between the two is when they take effect — a will is not considered legal until after death, while a living will takes effect while an individual is still alive.

Written Will

A written will specify a person’s wishes for all the assets they own after they die. Without a will, the estate is divided according to complex intestacy rules. Having a written will in place provides the peace of mind that all assets (including electronic records) will end up in the right hands. It also mitigates the risk of an administrative mess for those people left behind.

To write an effective will, a full inventory of assets must be taken. This helps to avoid uncertainty and disagreements. When drawing up a list of assets owned, it’s important to consider the total asset in fine detail. For example, include superclamp fixtures if they’re part of an object — the more specific an inventory is, the more effective and helpful it will be.

Living will

A living will is a legal document in which a single person is named as the healthcare decision maker who assumes responsibility if an individual becomes seriously ill and unable to speak for themselves.

It enables a trusted person to make decisions on behalf of an individual once they lose the capacity to do so themselves.  It’s also known as an advance directive and outlines what should happen to an individual in the event that they become incapacitated, terminally ill, or unable to communicate. It may include a do not resuscitate order relating to decisions about a life-sustaining medical intervention that may be needed in the future.

It’s generally best to get both documents drawn up the same time and they should be reviewed regularly — especially when people go through life-changing events such as marriage or having children.  Whatever decisions people make about their estate planning, it’s advisable to discuss them with friends and family as soon as possible to avoid surprises and confusion when a person passes away.

These are just two considerations for people planning their estate. What would you add? Let us know in the comments below.