Estate Planning

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What is estate planning & why is it important?

Estate planning is the process of documenting your wishes and how you want them to be carried out following your death. It’s an essential part of your life plan.

There are many different considerations when drafting an estate plan. It is important to consider how money and other assets will be passed should you become incapacitated or pass away.

People don't like thinking about their own mortality, but when they don't, they often leave a big job for their loved ones to unravel.

Estate planning starts with planning for your own needs first. Then planning for
the needs of others. In this way, you can effectively make a difference. We help
others best when we are on solid personal footing. 

What is an estate?

An estate encompasses the personal belongings, money, and assets you own at the time of your death. Your estate includes: real estate, including land and vacation homes, bank accounts, life insurance policies, stocks, bonds, mutual funds, retirement accounts, jewelry, vehicles, firearms, and other collectable or valuable items.

What is an estate plan?

An estate plan consists of a series of legal documents outlining how you want your affairs to be managed after you pass away. An estate plan may address questions and concerns regarding matters such as: guardianship, or who will care for your minor children or special needs dependents if you pass away, or you before you pass. Heirs and beneficiaries, or who will inherit money and property after your death. Who you trust and want to make financial and legal decisions if you become incapacitated, or who will make medical decisions on your behalf if you do become incapacitated.

What’s the difference between a will and an estate plan?

A simple will comprises basic directions for distribution of money and property, where an estate plan provides a detailed and comprehensive plan of action for your belongings, your loved ones, and yourself via the creation of legal entities such as trusts.

In most cases, a will alone forces your wishes to become a public record.

The first part of the dreaded probate process, is usually filing your original will with your local court.

A will is only one of the many documents that make up an estate plan. Many people make a will and assume it’s enough to protect their loved ones and ensure their final wishes are carried out. However, an estate plan is much more comprehensive than a will alone. A will, as part of an estate plan, becomes a 'catch-all', or a 'whoops, I forgot that' safety net, rather than the plan. In this day and age a simple will alone has little value.

Additionally, in most cases, a comprehensive estate plan keeps your affairs private, avoiding the dreaded probate process altogether.

Why else are estate plans important?

Estate plans are important for legal, financial, and personal reasons. A comprehensive estate plan can help ensure that you, your family, and your assets are protected before and after death. 

Comprehensive estate plans can help reduce or eliminate the mental and emotional burden of distributing assets, and the arguments that can unfold between family members if there are no clear instructions. A valid estate plan can also help protect your heirs from a hefty estate tax burden and ensure your wishes are carried out.

Estate planning can protect your loved ones the stress of probate court. Without an estate plan, a judge who doesn't know anything about you may determine who receives your assets, how your cash is distributed, and who gets to raise your minor children.

If you don’t want to give a single person complete control over your finances, you can designate limited power of attorney instead. The individual you choose can make decisions on your behalf, but only regarding scenarios explicitly noted in the document.

Medical power of attorney: Like a financial power of attorney, medical power of attorney gives one person the power to make medical decisions if you become incapacitated. You can pair your medical power of attorney document with a living will to create an advanced healthcare directive, which provides comprehensive healthcare instructions.

What is a trust?

A trust is a legal agreement that allows a third party, known as a trustee, to manage assets on behalf of your beneficiaries. With revocable trusts, you can also act as the trustee while you are living. Beneficiaries can also act as co-trustees, as long as they follow the direction of the trust document. When you set up a trust, you place certain assets in it, like money or property. At the time of your death, your trustee, or successor trustee will pass the assets to your heirs based on the trust’s guidelines.

You can choose from many different types of trusts, ranging from revocable or irrevocable trusts,  special asset trusts like firearm or gun trusts, charitable trusts that distribute assets to charities all at once, or over time, special needs trusts for disabled loved ones, and contingent trusts, which only allow your heirs to access the assets after fulfilling certain conditions. For example, you can name your child as a beneficiary to a trust, but only allow them to access the assets in the trust after they turn 25, or graduate from college.

Who needs an estate plan?

Everyone!

When should you start estate planning?

Right now, today, last month, last year … then revise it every three to five years, or more frequently if a life event occurs, or is anticipated.

Just remember to update your estate plan following major life events, such as marriage, divorce, birth of a child, a child becoming an adult, your or your spouse becoming ill, etc.

Estate planning leaves you and your loved ones prepared for the future.

No one wants to think about the end of their life. However, creating an estate plan can provide security and comfort for you and your loved ones now, and in the future.