Estate planning is essential to ensure that all of the applicable property is properly divided.
One of the steps is to determine what type of inheritance (if any) will be left to beneficiaries. In order to do that, it is recommended to make a list of all assets as well as any liabilities. This summary is helpful before proceeding with any decisions regarding the estate. The list should include a review of important documents such as deeds, insurance policies, and account information.
Another helpful tip is to talk to someone knowledgeable in estate and/or financial planning. This conversation will help one prepare for any potential tax problems. It is also a useful time for individuals or couples to review the specifics of what they would like their estate plan to look like. One of the steps involved in that conversation is to determine who will inherit specific assets.
Even those individuals with small estates need to make arrangements for the division of their property. Once it is known who should get what, it is important to put that on paper, including adding the proper beneficiaries to insurance policies.
Managing one's assets before death will make the distribution of property easier and more harmonious. When the disposition of assets is properly determined, the distribution of these items can usually be handled without incident. It is helpful to consider the management of assets while still alive just in case the estate planner becomes unable to make competent decisions later in life.
Some options may also include setting up a trust and power of attorney so someone can help make important decisions regarding financial matters.
Finally, it is important to follow through on setting up an estate plan so that it is ready should anything happen. Communicating ideas with loved ones and professionals is fantastic, but unless those intentions are documented, it can lead to multiple problems later. Advance preparation can help keep mistakes and family squabbles to a minimum.
Source: Fox Business, "Five steps for preparing your estate for inheritance," July 13, 2012