Your money: Wealthy or not, you need an estate plan

Many people believe that they're not "rich enough" to have an estate plan, but this couldn't be further from the truth. We believe that estate planning isn't necessarily about how much money you have; it's about reducing the burdens on your heirs. The real focus of an estate plan should be to help ensure that your assets are distributed in precisely the manner you wish.

We contend that everyone should have an estate plan. Here are four tips to help you get started:

1. Don't assume that a will is all you need to make wishes known. A will is merely one part of an estate plan, and in many cases, it's actually not the most important piece. You may also have durable powers of attorney, health care directives, life insurance policies and trusts. In fact, many retirement savings accounts, such as 401(k) plans and IRAs, have beneficiary designations assigned to them, and these supersede what's in your will. An estate plan will help to ensure your beneficiary designations are up-to-date and in alignment with what's in your will to avoid any confusion.

2. Choose a personal representative -- and do so wisely. When you die without having named a personal representative (called an executor in some states), a court-appointed person will typically helm the charge of meting out your assets. This could be a good thing or a bad thing, but why leave it to chance? Having a personal representative allows you to ensure that all stipulations in your estate plan are met.
The person you choose needs to know that they'll assume this role upon your passing and you must make sure they're up to the task.

3. Understand the consequences of NOT having an estate plan. If you die without a will or estate plan, your estate will be turned over to the state probate process. This can be time-consuming and very expensive -- the taxes and fees involved can absorb a large portion of the assets you had intended to leave to your heirs. In fact, they may have to sell off additional portions of your estate just to pay for these taxes and fees. Aside from the costly probate process, dying without a will or estate plan also means your estate may be left to someone whom you would have not preferred to receive your assets.

4. Review your estate plan on a regular basis. While you likely don't need to review the entirety of your plan every year, it's important to check in every three to five years, or when you experience a major life event (birth, death, marriage, divorce, etc.).

Aside from these basic tips, there are additional ways that working with a professional tax adviser and estate planning attorney may help you reduce taxes and address fees associated with passing down an estate. After all, when your heirs are coping with the emotional stress of your passing, the last thing you'd want them to deal with is a financial burden.