To avoid a burdensome, complicated and messy process, get your estate plan in shape

No one likes talking about death. Estate planning, which involves creating a plan for your assets after you die, is touching on that subject. Not having an estate plan in place, however, can create many problems for your family.

The words easy, affordable and harmonious are rarely used to describe the process of sorting out your estate if you die without an estate plan. Difficult, burdensome, complicated and messy are the words I typically hear.

Do you want your loved ones to have to deal with a difficult, burdensome, complicated and messy estate division? Most would say no. So it’s worth the time, effort and expense to create an estate plan.

Keep in mind that having an estate plan isn’t important only after your death. It’s also important if you’re still living but become incapacitated or unable to act on your own behalf.

What does an estate plan do?

One of the purposes of having an estate plan is to relieve the people you love from having to worry about unwinding your estate after your death. Of course, the executor of your estate will have some role in this process. But your estate plan will provide him or her with instructions for distributing your estate and so will likely require less of their time.

Your estate plan spells out how you want your assets divided after your death, if you want to be buried or cremated and who is to be the guardian to your minor children, among other things. There is no limit to what you can specify in an estate plan.

Typically, if you don’t identify where your assets will go, they will pass to your descendants — but not without additional steps. And if you become incapacitated while you’re still alive, your estate plan can designate who will make financial and health care decisions on your behalf.

The bottom line is: Do you want to be in control or have someone else make decisions for you?

What documents make up an estate plan?

Depending on your personal situation, there are many different estate planning documents you may need. To help protect your interests while you’re living and after your death, you should consider having the following three documents created:

▪ Last will and testament: This document states your personal wishes regarding how you want your assets distributed after your death, who the executor of your estate is, who the guardians for your minor children are, etc.

▪ Durable financial power of attorney: This is a list of individuals whom you would trust to manage your finances (paying bills, decision making, etc.) if you were incapacitated or unable to do so yourself.

▪ Durable health care power of attorney: This is a list of individuals whom you would trust to make health care decisions on your behalf if you become incapacitated or unable to do so yourself.

Titling, beneficiary designations important

Proper titling and designation of beneficiaries ensures your assets will be distributed according to your wishes. Most assets, such as bank accounts, cars, real estate, investments and life insurance, can add these features. If your assets aren’t titled properly or don’t include a list of beneficiaries, they will have to go through the probate process.

The probate process involves a court deciding how your assets will be divided. It can be a lengthy and costly process, which can become a burden for your family while they are grieving your loss. Having a last will and testament in place makes the process easier for the court — and easier for your loved ones.

I like to use this analogy: You bought the car (your estate planning documents), now you need to gas it up (by properly titling your assets and adding beneficiary designations).

Review your documents regularly

Once you have an estate plan in place, it’s important to review it regularly, at least every five years, to account for any life changes and to make sure your assets are titled properly and your beneficiary designations are still current and reflect your wishes.

In conclusion, my advice is to buy the car and add the gas. Lock it away — but pull it out of the garage every few years to make sure it will still get you where you want to go. Your loved ones and heirs will thank you.

Matthew Charles is a CERTIFIED FINANCIAL PLANNER professional and an active member of the Financial Planning Association of Greater Kansas City. He is a senior wealth advisor for Mariner Wealth Advisors in Overland Park.