Estate Planning 101:  4 Ways You Can Get Your Affairs in Order

Getting your affairs in order could mean anything depending on the phase of life you are in.

It could mean getting married, divorced, or moving to a new home but for most, the phrase is used when referring to death. Thinking of one’s death now might seem very dreadful but imagine passing without leaving your affairs in order. That leaves your family with the massive task of sorting things like taxes, investments, and loans for you. 

How do you get your affairs in order?  Here are 4 simple ways to get you started.

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1. Have a Document Checklist 

Having all your documents in one place, will not only lessen the hustle for your family but it will also give you the time to sort through what you own. When you think of collecting all of your documents, it might seem like a daunting task, especially if you can’t recall where you placed some certificates. 

Collecting all your documents might take a while and that’s okay, you could collect the documents over a period of months or even years.  You could start by finding a safe place to keep your documents.  The safe place could be with a lawyer, in a safe, or even online. 

Having everything close and in a safe place could additionally help you divide what you own into tangible and non-tangible assets and assist in giving an estimation of its value or worth. Tangible assets include things like land,  your home, cars, and personal items. Non-tangible assets are things like stocks, bonds, and savings accounts. 

Other documents to include are your will, tax returns, official certificates (birth, marriage, etc) life insurance policies, and business-related documents. You could also include contacts of relevant persons ie, the people who manage your money or property. 

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2. Plan Your Finances

Estate planning is one of the best ways you can protect your money and legacy according to certified financial planner Lazetta Rainey Braxton, co-founder and co-CEO of 2050 wealth partners.

Getting your affairs in order, helps you plan ahead for the distribution of your wealth. It gives you time to consider who you will leave in charge of your assets, taxes, bank accounts, and personal objectives and set in a plan for how you will manage debt and whether or not you want to get life insurance. 

If you plan to pass down your wealth to your loved ones after your death, estate planning could help reduce the impact of income taxes, gift taxes, estate taxes, and other costs related to transferring assets and also not leave your family in financial limbo.

Planning who gets what not only saves your family from financial limbo but also eliminates the chances of long costly family court disputes. When planning your estate,  consider familiarising yourself with estate and inheritance tax laws in Kenya because they may vary from jurisdiction to jurisdiction. 

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3. Get a General Power of Attorney

If you ever reach a point in your life where you cannot make decisions on your own due to health problems, an accident, or whatever reason, consider having a power of attorney. Picking a person or people to make health and finance decisions on your behalf is the most crucial decision you will make when estate planning. Give it a lot of thought before making a decision. Once you have someone in mind, ask them if they are willing to assist you in the event something happens to you. 

Consider having a backup person as well in the event your first choice can't do it.  This could be the same person though they don’t have to be. You could have a durable financial power of attorney which enables someone else to handle your financial affairs if you are unable to do so yourself. The appointed person will act in accordance with the document's instructions, on your behalf in legal and financial matters. This includes accessing and managing your assets as well as paying your bills and taxes.

In a situation where you can’t make any health care decisions for yourself, you can put in place a health care power of attorney. This will name someone as your representative that can make all your healthcare decisions in a situation where you cannot communicate them on your own. The person you choose to be your representative should be someone familiar with your values and wishes. Having a healthcare representative is one way to plan for unforeseen situations like a heart attack or a car accident. It might also be necessary to have health insurance before allowing someone to discuss your condition with doctors and nurses.

Having health insurance may save you from draining all of your savings on medical expenses.

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4. Last Will and Testament

A Last Will and Testament outlines your final wishes. When you have created a will, you (the testator) name a person (estate executor)to oversee the distribution of your assets. A Will outlines how your money, property, business, and other possessions will be divided and managed after you have passed.  A will can include care for children under the age of 18 and adult dependents. 

A will can also cover end-of-life decisions like a funeral or a memorial ceremony. According to a 2018 study conducted by Ipsos Synovate, Kenyans spend between Ksh50,000 to Ksh300,000 in funeral expenses. Knowing the costs in advance could aid in your decision-making, for instance, you could set in place an account and leave instructions for using the money for your funeral.

Life doesn’t stay the same for most people and an estate plan should adapt accordingly. Major life events like the birth of a child or changes in your financial situation should prompt a revisit of the estate plan. Even when there are no major life changes, occasional reviews of your estate plan are recommended to ensure the estate plan remains up to date and stays relevant with any legal amendments. 

Wrapping Up

There are two things in life that we are certain of, life and death. Just as it is essential to prepare for any major life event like the arrival of a newborn or a new job.  It is essential to have your affairs in order for your departure as well.  

Having your affairs in order, not only spares your family from the paperwork hustle but also gives them time to grieve and gives you peace of mind that you left your business in order and that your loved ones will be well taken care of even after you have passed. You might think estate planning is only for the rich and famous but if you have anything of value you are going to leave behind then it's best you start to plan now.

Once you decide to get your affairs in order, it's important you speak with qualified counsel so they can assist you through the process. You run the risk of making mistakes in the paperwork or forgetting to include specific assets, which could lead to disputes later on among your beneficiaries. Although preparing for your death may seem depressing, you are ultimately doing it out of love for the people you will leave behind.

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