In our busy lives, we are so occupied with the thoughts of earning a lot and saving for our future generations. But making sure that all of our possessions (both physical and digital) fall into the right hands is crucial. Have you ever wondered what happens to your digital assets after you die? If not, then estate planning can come to your rescue.
Estate planning is an important aspect you must account for throughout your life. An estate plan safeguards not just your possessions, including your digital estate, but also ensures that they are passed on to your loved ones without any hassle. By planning for your estate, you are ensuring their well-being, even when you are not around.
Why Is Estate Planning Important?
Writing an estate plan often seems like something only the ultra-rich would consider. But, that is not the case. Every adult needs an estate plan to safeguard their possessions and pass their assets to their loved ones. Nowadays, it is much easier for an individual to do so as the estate planning cost is also very reasonable. An estate plan ensures that everything you own and mention in the plan gets safely passed on to your beneficiaries.
No matter your financial situation, you must plan for your estate as it makes a big difference in your taxes and makes things much easier for your loved ones. Estate planning ensures that the organization of your personal and financial assets is easier for your family when you are no longer around.
Who Is Estate Planning For?
Estate planning is not just for the wealthy. The importance of estate planning lies in the fact that it safeguards our assets (both digital and physical) and ensures our loved ones get our possessions. The future is unpredictable. Hence, we should consider what we want to do with our possessions. Planning for your estate ensures that your assets are well taken care of. No matter how huge or modest, you must safeguard your assets and ensure they are passed on to your family.
If you have children, you must ensure there are guardians in case you are not around anymore. You can also name a property manager to care for your property until your kids are of legal age. As for your digital assets, you can include them in your estate or make a separate social media will for your social media accounts and specify how you want them handled. Estate planning also covers your health care wishes. Hence, if you find yourself gravely ill, you can nominate someone to make healthcare decisions for you. Therefore, estate planning is a vital aspect of life that you must account for.
What are the three elements of an estate plan?
Now that you know the importance of creating an estate plan, given below is an overview of all elements covered in a simple estate planning worksheet for your digital assets. Refer to the factors mentioned below to make it easier for yourself to start planning for your digital estate.
Creating a will
An essential element of estate planning is creating a will. A will is a legally accepted document that formally states your wishes regarding the distribution of your digital assets amongst your chosen beneficiaries. Therefore, creating a traditional and digital will that looks after your digital estate ensures your loved ones inherit your digital assets after your death.
Assigning an attorney
A power of attorney refers to the written authorization to legally act on somebody’s behalf. In the event of your death, you can assign an attorney who makes confident choices for you- financial or medical. You can specify instances where you want the attorney to make choices for you. For your digital assets, the RUFADAA guidelines are established that protect your best interests as they offer fiduciaries a legal way to manage your digital assets.
Waivers
Signing a waiver is an added safety layer, even when you create a will. Although writing a will is extremely important, sometimes the beneficiaries are denied access to your digital assets. Because of this reason, signing a waiver will ensure that your loved ones get access to your digital assets.
How do you structure an estate plan?
You can structure an estate plan more or less in many ways. If you comply with state rules and use legal language, an estate plan will be valid. But, you must consider a few other factors before writing a will or planning your estate. Consulting a professional when creating an estate plan will assure you that your plan is appropriately structured and covers everything you need to include.
What are some of the common components of an estate plan?
Estate planning can seem overwhelming as there are a few elements to it. But, all standard estate planning components are pretty straightforward. Below are the typical components of estate planning you must consider.
Wills
Wills are an essential factor in estate planning. A Will legally records your wishes for your estate and formally declares beneficiaries. A will also mention how you want things handled after your death. When it comes to your digital assets, you can rely on digital estate planning. It is also a feasible option to have a Social Media Will in place to take care of your social media handles.
Trust
A trust is a legal entity to choose who holds your assets apart from the beneficiaries. There are various trusts, but most people choose revocable trusts, also known as living trusts.
Power of attorney
Assigning a power of attorney designates someone to take over and manage your finances in case you are incapable of doing so. In the same line, you can even appoint a guardian/conservator or authorize your attorney/conservator to choose a guardian for you in case one is required. You can do the same for your digital assets as you can nominate a beneficiary in your digital estate plan and an executor to execute your will in case of your demise.
Health care
Assigning someone to speak for you in case you can’t speak for yourself is essential when estate planning. You can also mention to the extent you want measures to be taken to keep you alive in case you are incredibly ill. The same is applicable for the fate of your digital assets. You should note that your decision is the ultimate decision, so long as you can communicate your wishes.
Beneficiaries
Declaring beneficiaries is a natural outcome when you are formulating an estate plan. It would be best if you nominate beneficiaries that acquired your possessions, be it digital or physical, after your death.
Review
You must review your estate plan periodically to ensure all your assets including your digital estate are covered and adequately distributed amongst your beneficiaries.
What are the four important estate planning factors?
Estate planning is simple as long as you consider a few aspects before you create it. An estate plan will look different for everyone. But, the four aspects you must consider before you begin are listed below.
Estate Plan Essentials
Before drawing up a will or planning for your estate, you must create an estate planning documents checklist to ensure you do not miss out on anything. You must review the number of possessions and the list of digital assets you have, cross-check the beneficiaries, review the language, etc., to ensure the plan is valid.
Make your will up to date
One of the most important factors of estate planning is making a will up to date. When you create a will, you should review it periodically to ensure that all your possessions are covered and that you have distributed it the way you wish.
How Will Taxes Affect My Estate?
Your assets might be subjected to inheritance and estate taxes after you die. But, this depends on where you have lived and how much you are worth (net worth). Therefore, even though there is a threat of taxes, most estates are too small to be charged with a federal tax. Similarly, your digital assets fall under RUFADAA guidelines. Hence, it is highly recommended that you list out digital assets and the beneficiaries to them in your will so that they can be subjected to the appropriate taxes.
Getting in touch with experts
Although there are ways you can create a will online, you must consider talking to a professional before planning for your estate. Estate planning is not a tiresome process. But, if not appropriately curated, it can be deemed invalid. Hence, consulting a professional will ensure that your plans are valid and legal.
Do I Have An Enduring Power of Attorney?
We can more or less create a will the way we want to. An enduring power of attorney (EPA) means you can assign someone in your will who can help make decisions regarding your property and money.
The person who assigns an enduring power of attorney is called a “donor,” and the assigned is the “attorney.” As the EPA, one can manage donors’ bills, finance, building and bank accounts, pension, property, investments, etc.
Do I Have an Enduring Power of Guardianship?
You can assign a person an enduring power of guardianship (EPG) in your will that makes vital personal, treatment, and lifestyle decisions for you. An EPG must be above 18 years old and have total legal capacity. The person appointed as the enduring power of guardianship can make decisions regarding treatment plans, your place of residence, etc. But, they can’t make decisions regarding property or finance.
You can even appoint two EPGs, wherein they are referred to as joint enduring guardians. They must agree on the decisions they make and cooperate. Therefore, before you appoint joint guardians, you must evaluate the ability of both people to work together. You can even appoint a substitute guardian who makes decisions if any appointed guardian cannot continue the job.
Conclusion
Estate planning is essential for everyone. It ensures that all of your assets are taken care of, and your loved ones are given what they deserve. We must consider what we want to do with our assets after we pass away. Planning for our future is very crucial. If you want to create an elaborate digital estate plan, CLOCR is the platform for you.
The importance of estate planning lies in the fact that the future is unpredictable. We must plan to safeguard our loved ones and our possessions. We at CLOCR help you in the art of digital estate planning, cementing your digital legacy in the long run. Our unique products, such as the digital vault, safeguards and secures all your vital digital information. Clocr ensures everything is in place and that you are secure when it comes to your future.
