8 Things Suze Orman Absolutely Nails About Estate Planning

If you don’t have a will or a revocable living trust, you're in good company in the United States. However, if you die without either, the courts will follow state law to disburse your assets.

If you only have a will, the courts will need to approve the document before dividing up your estate. This is known as probate and can cause headaches for your loved ones.

Instead, here are eight estate planning tips from financial expert Suze Orman to help your family get ahead financially.

This is a topic that makes many people and families feel uncomfortable. After all, not many people want to think about death and what happens to their loved ones after they leave this world.

However, a lack of estate planning can cause huge headaches and unnecessary costs for your loved ones. That’s why estate planning is a gift you can give your family, and setting up a smooth inheritance is probably not as hard as you think.

This is not just a tool reserved for the extremely wealthy. In simple terms, this kind of living trust lets your heirs avoid probate and keeps you in control of your finances while you’re alive.

After you pass on, the person you designate as your successor trustee takes over and follows your wishes. You can have an estate attorney help create this or fill out the forms on your own.

This type of trust won’t do you any good if you don’t fund it. You can move an asset into the trust simply by changing the title from your name to the trust’s name.

You could do this for your home and still have total control. You are the trustee while you’re alive. Then, your successor trustee takes over and follows your instructions without going through probate.

Try to put your savings accounts and non-retirement investment accounts into your trust along with your home. Your IRA and 401(k) accounts should be kept separate because they are governed by different rules.

You’ll likely want to have a will as well. This is where you specifically state how you want your non-investment possessions to be disbursed.

You can do your family a huge favor by itemizing things in your will and being as detailed as possible. You can ask your older children what items they may want. This can all help prevent arguments from arising later.

Here’s one other tip: Make sure all the beneficiaries on your accounts are the people you want to be named.

You want to avoid making young children the beneficiary of any asset. Laws prohibit anyone under 18 from being able to inherit money or assets directly. Your child’s guardian will have to jump through legal hoops to access the funds to care for the young one.

You can skip this mess by setting up a trust to disburse assets to your child’s guardian for the benefit of your kid.

This is particularly important if you’re divorced. You should review the beneficiary forms for your IRA or life insurance policy.

You may think you’re covered by a trust or will but don’t make assumptions. The beneficiary document attached to the IRA accounts and your life insurance policy overrides what you state elsewhere.

You don’t need to wait until you pass on to share your assets with your loved ones. You can follow tax rules to give your loved ones financial gifts and see how those help enrich their lives.

But be careful when giving gifts. You don’t want to give so much that it will hurt you in the present. Instead, carefully consider the amounts and specific assets you can give now and those you’ll want to keep for the years ahead.

This can be an uncomfortable step for some people. They may not be ready to name a power of attorney and feel like that step can wait until they’re more advanced in years or need something. However, it can greatly help simplify things if a power of attorney is named.

In addition, you may want to consider having an advanced directive. This legal document outlines your wishes for medical care if you can’t communicate them. It can name a person who can make healthcare choices for you.

Doing estate planning now can help reduce the financial stress on your loved ones when you pass on. Creating a will and revocable living trust are among the steps to help ease the burden on those you care about the most.

You can talk to a lawyer and have them involved from the start, or perhaps work with a trusted loved one to fill out some forms on your own and then seek professional help.