Estate planning can seem like a significant challenge to some people because they just don't know where to start. Luckily, there are specific steps that most financial and estate planning experts agree are a good guide for navigating through the estate administration planning process in Maryland and other states. Following these steps will ensure that one's estate will be secured for intended heirs.
The first step in planning an estate is to create an inventory list of all of one's possessions, which should include both assets and debts. Account numbers and contact information for associated financial institutions should also be included. This list should be kept in a secure location with originals of important financial and legal documents. The chosen executor of one's estate should be provided access to these secured items.
An effective estate plan should not only consider what to do if a person dies, but it should also have a strong contingency plan in the case that one is incapacitated. This should include a plan for providing the financial means for covering possible medical expenses. Disability insurance is a common option for many people to address the possibility of incapacitation. It is also a good idea to provide written instructions on who should be given guardianship of minor children.
Usually people are most concerned with protecting one's assets in order to maintain the estate being distributed to intended heirs and beneficiaries. Therefore, it would be preferable to avoid as much exposure to tax liabilities as possible. In order to achieve this, it is necessary to develop strategies to transfer or liquidate a family-owned business, investment property or residential real estate. Trusts and permanent life insurance are common instruments used to achieve these goals.
Since nobody knows when something unfortunate may happen, it is important for people in Maryland to begin planning for estate administration as soon as possible. However, it is also essential to have knowledge of applicable laws. This will ensure that one will be able to make the best possible decisions when planning an estate.
Source: Forbes, Northwestern MutualVoice: 6 Essential Steps For Every Estate Plan, No author, March 12, 2014