When there is a task that seems very daunting, it is easy to put it off. This seems to hold true for many people when they think about putting together their estate plan. No one wants to think about dying and what will happen to all of your assets if you do. After all, you have worked hard to build what you have. Do you really want to let someone else decide what happens to it upon your passing?
Each State has its own set of rules on how your estate will be distributed if you pass away without a will. The state’s plan may be in line with your wishes, but it may also be completely off. This is especially true if you are in a second marriage and each of you have children from the first. It is very important to have a plan in place for your assets, especially if you are a business owner like a farmer or rancher.
Many variables can create a need for your estate plan to be more complex but start with the basics and expand the complexity if necessary. There is no reason to complicate things more than you have to. Prioritize your goals and keep them top of mind when developing your estate plan.
Simply stated, a will is a written set of instructions indicating how to distribute your estate at your passing. To establish a will, you must be at least 18 years of age and of sound mind. This makes many of you prime candidates to create or update your will. Typically, it is important to have a will in place if you have begun to build your wealth or if you have young children. If you have children under the age of 18, it is important that you name guardians to care for them should something happen to you. It is also important that you name trustees to handle the finances for the benefit of your children until they are old enough to do so themselves. Once you have determined a plan for your assets, you’ll also want to make sure the assets are properly titled, and beneficiary designations for life insurance, retirement plans, IRAs and annuities align with your plan.
As you continue growing your assets, both personal and business, it is important to review your will to make sure the plan is still in line with your wishes and allows for preservation of your business if that is your desire. Your will becomes an important part of your business continuity plan if you are transitioning the business to an heir or another individual. As your business evolves, your will should include answers to some of the following questions: Who will receive my business assets, such as machinery and equipment? If farming children need to buy the assets from my spouse or their siblings, what is a fair price? How long will they have to pay for it? Do I have a farming heir that should have the right to rent or purchase my farmland to make sure they can keep their business viable? And a major question to address is, do I want my estate distributed fairly or equally?
In addition to your will, your estate plan should include some instructions as to who can handle your affairs while you are still living if you cannot do so yourself. A durable power of attorney appoints an attorney-in-fact to handle your financial affairs. A health care directive appoints a health care agent to make health care decisions on your behalf if you are unable to communicate for yourself, as well as provides a written set of instructions to guide your agent in making decisions for end of life or terminal situations. These two documents are often just as important as your will. Making sure you have appointed someone you trust to handle your affairs can help ease your mind and make it easier for someone to step in and do so in the unfortunate event you become disabled or incapacitated.
Don’t let these decisions overwhelm you. When you break them down piece by piece and involve your team of professionals, suddenly the task of putting together your estate plan seems a lot less daunting.