How to create an estate plan.
Whether your financial statement resembles the Rockefeller's, the Cleaver's, or the Simpson's, you need to have an estate plan. Such a plan will ensure that upon your death, your assets will be distributed according to your wishes. It may be as simple as making a beneficiary designation on your retirement plan, or as complex as hiring an attorney to draft an elaborate plan that will provide trust income for generations to come.
Start by taking stock of your assets. Assets include your retirement plans, investment accounts, bank and brokerage accounts, insurance policies, real estate, automobiles, and so on. Consider who should inherit these assets in the event of your death. You can generally complete a simple form to designate a beneficiary for your insurance policies, 401(k)s, IRAs, or other qualified retirement plans. "Transfer on Death" (TOD) or "Payable on Death" (POD) provisions may be added to bank, brokerage, or investment accounts and will accomplish the same goal.
These designations are added with a simple form as well. In the state of Ohio, TOD can even be added to a property deed, generally with the help of an attorney. You can add TOD to your vehicle title for approximately $7 next time you renew your license.
It is important to note that TOD, POD, and beneficiary designations will "trump" your Will or other estate plan documents so they must be kept current. There have been countless cases where an ex-spouse has inherited a sizeable retirement plan or the payout on a life insurance policy simply because beneficiary designations were never updated after a divorce.
A Will should be drafted by an attorney whose primary practice of law is estate planning. Your Will declares your wishes for the distribution of your property when you die that is, anything that isn't already distributed by TOD, POD, or beneficiary designation. You may also appoint guardians for your minor children in your Will.
Depending upon the size of your estate and your desire to maintain control over how and when your assets will be distributed after your death, you might consider having an attorney draft a trust. A trust may help you to reduce your estate and gift taxes, as well as avoiding the cost, delay, and publicity of probate.
Other documents that should be a part of your estate plan include a Health Care Power of Attorney, Living Will, and financial Power of Attorney. These documents will allow you to name individuals who will make health care, medical, and financial decisions for you if you become unable to make these decisions for yourself. Ohio statutory forms are available online, but you may be wise to consult with an attorney.
Once you've created your estate plan, be sure to discuss it with your heirs. Be certain that your intentions are clear. This may help to eliminate conflicts that might arise after your death.