5 great tips for “peace of mind”1. Execute a will.
Estate planning isn’t just for the wealthy. As adults, we all NEED an estate plan. Your will specifies what happens to your property when you die. This is important because your state has a default set of rules for people who do not leave instructions.
For most Americans, an estate plan is most commonly referred to as a will or “last will and testament”. It spells out who gets what from your estate. A hand written will can be valid, however it’s drastically safer to have a lawyer prepare your will and walk you thru the formal execution of it. If you have a spouse or children, you really need a will to reduce confusion and conflict and to make sure your loved ones are properly taken care of.
2. Designate your health care wishes.
Who will make important medical decisions for you in the event of an accident or illness? Without the appropriate legal estate planning, your next of kin will attempt to make the decisions. But does he or she know all your wishes?
You NEED to protect your life by at least appointing a health care power of attorney in your will. This designates the person who will legally make decisions on your behalf. Your power of attorney is legally bound to make the decisions that you want, not what they think is best.
If you want to go an extra mile, you can execute a living will. This document was created to legally make known your wishes for different medical situations, especially when medical care and treatment is prolonged. It can also be referred to as an advance directive, health care directive, or a physician’s directive. Then your health care agent will be bound to act according to this document. If you chose to neglect both of these health care documents, your life could end up in the hands of someone you don’t trust.
3. Select your beneficiaries and be certain.
Do you have a life insurance policy or retirement plan? Who are your beneficiaries? If you have not listed your beneficiaries, you and your family could be in for a big surprise.
Life insurance and retirement plans will automatically pay the designated beneficiary when the policy holder passes away. To make sure your heirs get their inheritance, you should designate each of them by name as beneficiaries. Avoid listing your estate itself as beneficiary. If your estate gets paid directly, your loved ones, who are your true beneficiaries, will be in for a long wait before they can be paid and your creditors could lay claim on your money before them. Those beneficiary blanks are very critical.
4. Get insurance, even if you are renting.
Property insurance is an absolute must when protecting your property and it isn’t just for homeowners. Even if you rent, you need insurance. Homeowner’s or renter’s insurance primarily covers you against property loss due to damage or theft. It can also be important if you’re ever sued.
When guests come onto your property, you legally take on a certain amount of implied liability for their safety. If someone is injured while on your property, you could be held responsible, and even sued. Fortunately, the typical property insurance policy will reduce the liability and provide protection for you. Guest medical coverage can pay for your guest’s medical bills, if included in your policy. For the cost of a renter’s insurance policy (at most $15/month), you simply CANNOT afford to neglect this coverage.
5. Separate your business.
If you run your own business, you should consider a limited liability business entity. Running a sole proprietorship is simpler, but it exposes you and your family to certain risks. This same fact applies to partnership entities as well. Creditors and even dissatisfied clients can come after you personally, putting your personal assets, such as your home, in jeopardy.
To alleviate this concern, you can easily setup a basic corporation or a limited liability company (LLC). Consult with your attorney to determine which entity is right for you. This way, when you sign contracts and incur business debt, you are only putting the business on the line. Once your business is a legal entity, it’s important to run the business properly to shield your business from liability. Without being a formal business entity, you have no way to limiting your personal liability.