Planning for your death is probably something that you would rather not do. After all, there are more enjoyable things to do than thinking about your own demise.
If you haven’t gotten your final affairs in order, you are not alone. According to a recent survey by AARP, 60 percent of American adults have not drafted a will or estate plan.
Benefits of Estate Planning
As unpleasant as the thought might be, death can happen to any person at any time. The most financially prudent thing you can do is plan how you will take care of your loved ones after you die.
By creating an estate plan, you can:
- Designate your beneficiaries
- Protect the futures of your young children
- Prevent your loved ones from overpaying in taxes
- Clearly define your final wishes
Creating an estate plan does not have to be a stressful event. In fact, a trained estate planning professional can show you how to seamlessly create a plan that is right for your circumstance.
How to Care for Your Loved Ones After You Die
In addition to creating a will, there are other things you can do to ensure that your family is in a good position to move forward after you die. Here are a few actions you can take to protect your family.
1. Get a sufficient amount of life insurance.
This is especially beneficial if you are the primary source of financial support for your family. It is a good idea to get a life insurance policy for at least 10 times the amount of your annual salary. Contrary to popular belief, the purpose of getting a sufficient amount of life insurance is not for your family to live an extravagant lifestyle at your expense. Life insurance provides a financial safety net that ensures that your family will not have to deal with financial challenges in addition to their grief.
2. Periodically update your beneficiaries.
Throughout the years, life can change. You might experience a divorce, get married or have additional children. It is important that your will, 401k, annuities, life insurance and other financial instruments reflect these changes. As you experience changes in your life, routinely review your beneficiary designations and make the appropriate adjustments.
3. Gather your important documents.
After you die, your family should know the location of your important documents including your will, vehicle registration, life insurance policies, tax returns, funeral arrangements and financial statements. Gather your documents and put them in a location that is easily accessible to your loved ones. Ideal storage spaces for your documents include a safe, in your attorney’s office and on your computer.
Estate planning is not reserved for rich people with a large bank accounts and assets. You can apply these tips even if you have a modest net worth. The important thing to do is take immediate action to protect your loved ones.