When people hear “estate planning,” they often think it only applies to the wealthy. If you have assets, it applies to you. The goal is to pass on your assets to your loved ones. Here are some things that you should know and do.
Make sure your beneficiaries are up to date on ALL your accounts. I have seen former spouses unintentionally still listed as beneficiaries. Sometimes, no beneficiary is listed, which pushes accounts into probate. This can easily be avoided.
Verify that your beneficiaries are who you want them to be on your accounts and insurance policies. Check your retirement accounts: 401k, IRA, Roth, etc. Generally, it is better to list individuals on your retirement accounts (rather than a trust). Non-retirement accounts include your banking and investment accounts. They should at least have Payable on Death (POD) or Transfer on Death (TOD) beneficiary designations. Or they can be owned jointly with another person or by your trust. Don’t forget to verify beneficiaries on all life insurance policies, including policies through your work. Create will(s), trust(s), medical directives, and POA(s).
A will allows you to specify the 5 W’s of your assets: Who gets What? Where is it? When do they get it? Why do you want them to have it? This last “W” allows you to specify important things like naming a guardian for minors or special needs children.
A trust can own assets and avoid probate. A trust also specifies the same 5 W’s as the will. If you own a home in Utah, the best practice is to own it in a trust. If your home isn’t owned by a trust, it is almost certain to go through probate, which takes a long time and costs thousands of dollars.
Medical directives specify your wishes for medical care if you are unable to communicate. A power of attorney specifies who can make decisions or transact business for you. You can either have an immediate power of attorney or springing power of attorney. Immediate POAs have the power to transact business now. This is usually done for a spouse/partner or an elderly loved one. Springing POAs only grant authority if you are incapacitated.
Estate planning attorneys can create any or all of these documents to simplify the transfer of assets. In Utah, a typical range for the whole package is $2,500-$3,500, depending on the complexity and the services provided. This is almost always cheaper than probate in Utah, which can run anywhere from $2,000-$10,000 or more. (Some states are more expensive than that.) In addition, having a trust will keep your information private, avoid probate, and save your heirs a lot of headaches.
Don’t let the courts decide for you. Be intentional about passing on your hard-earned assets to your heirs.
Listen to a deep dive into estate planning mistakes on the Power Up Wealth podcast.
