Estate planning

Planning how your assets will be distributed after you die is also an important part of financial planning. You work hard for your money and possessions, and you want to make sure your remaining assets are distributed according to your wishes.

Wills

Unless you specify in a will, which is a formal legal document, who should receive the assets that are part of your probate estate, you can't be sure that your wishes will be followed. The important information you should state in your will includes:

• Your beneficiaries, or the people and institutions that you'd like to receive some portion of your assets
• Your executor, or the person in charge of carrying out your wishes
• A guardian for any minor children or children who are unable to be responsible for themselves

Trusts

Another way to leave money to your heirs is by creating a trust, or setting aside money that's controlled by a trustee who invests money in the trust and delivers it to the beneficiaries according to your directions. You can establish and fund a trust while you're still alive, or instruct that one be created in your will.

There are two main types of trusts. Revocable trusts can be changed any time, but any assets in them will be included as part of your estate when you die. Irrevocable trusts can't be changed, which means that once you create one it's permanent. The advantage is that assets in the irrevocable trust won't be included as part of your estate.

Beneficiaries and joint owners

There are other ways to plan for sharing your assets. You name beneficiaries for your retirement plans, insurance policies and annuity contracts. At your death, the beneficiaries inherit directly, without having to be named in your will.

If you own property with someone else, under an arrangement called joint tenants with rights of survivorship, sometimes shortened to JTROS, your joint tenant inherits your share at your death. You can own real estate jointly, as well as investments, bank accounts and other assets.