For many, the phrase “estate planning” invokes images of billionaires with large mansions and private jets. But estate planning is not only for the wealthy, it's for everyone, and it's very important.
The term “estate” simply refers to all the things a person owns. The phrase “estate planning” then, refers to providing instructions for whom you want to receive your possessions, as well as, when and how they should receive them.
If you don't put an estate plan in place, then what happens to your estate after you die will be determined by state laws, and your loved ones may be left with a mess to sort out. If you want to do what's best for your loved ones, you will take the time to engage in estate planning with the assistance of a qualified estate planning attorney.
Essentially, every estate plan is based on one of two fundamental estate planning documents, or both:
- A Will; and/or
- A Living Trust
Both will allow you to dictate to whom, when, and how your assets will be distributed, and how your minor children will be cared for after you are gone. However, there are some differences between a Will and a Living Trust.
A Will can allow you to choose guardians for your minor children, but to take ownership of possessions listed in your Will, your loved ones will be forced to go through an expensive court-supervised process called probate. A properly executed living trust, on the other hand, can allow you to transfer your possessions while completely avoiding the probate process.
Other estate planning documents that are an essential part of every comprehensive estate plan include:
- A General Durable Power of Attorney - to designate an agent to handle your financial affairs when you are unavailable or incapable of doing so yourself;
- A Durable Power of Attorney for Health Care - to enable you to appoint someone to make medical decisions on your behalf when you are incapacitated;
- A Living Will - to express in advance your preferences for end-of-life medical treatment; and
- A HIPAA Release Form - to enable your loved ones and caregivers to access your medical records and treatment information when necessary, without having to go through an elaborate court process.
Estate planning can get complicated, but it's well worth it. What's more, an experienced attorney can assist you with putting in place all the documents you need to achieve your estate planning goals.
- It’s a Roadmap - Estate planning leaves a roadmap to let everyone know who you want to receive your assets after you are gone, and the way that you want them to receive the assets. With proper estate planning, you can control a lot, even from the grave.
- It Avoids Conflicts - Having a comprehensive estate plan will help your family avoid conflicts after you are gone. If everyone knows that you met with a qualified attorney to discuss your family, your assets, and the distribution of your estate, and that you now have a plan in place, they will be much more likely to respect your wishes after you are gone.
- To Provide for Your Loved Ones - Perhaps the most important reason why estate planning is so important is that it will help you protect and provide for your loved ones. Estate planning can protect your loved ones from creditors, future divorces, and even from themselves when they are financially irresponsible, have bad habits, or worse.
- To Choose Who Cares for Your Children - If you have minor children, estate planning is a lot more important. Your children depend on you. Who will take care of them when you are gone? If you don't choose how your minor children will be cared for after you are gone, a judge will choose for you. But you don't want a judge deciding who takes care of your children. A judge doesn't know you, your children, or your family. Responsible parents know they need a comprehensive estate plan in place to make sure that their children are taken care of, by whom they want and in the way they want.
- It Avoids Probate - Estate planning can save your loved ones a great deal of time, money, and aggravation after you pass away. If you die without an estate plan, your family will have to go through the process of probate to receive ownership of many of the assets you leave behind. Probate is an expensive and time-consuming court process, and not something that you want to put your family through when they are already grieving over your death.
- Peace of Mind - Estate planning will provide you with a tremendous amount of peace of mind. You will feel great relief once you know that everyone you care about will be taken care of after you are gone, and that everyone will know what your wishes were.
To summarize, the goal of estate planning is to protect your loved ones and everything you have worked hard for. Estate planning enables you to provide instructions for whom you want to receive your possessions, as well as, when and how they should receive them. That's why estate planning is so important.
For more detailed information regarding estate planning for your family, consult with a qualified and experienced estate planning attorney.