Learn everything you need to know about estate planning including what it is, getting started & the basics of estate planning in this guide.
Estate Planning involves setting up a plan that establishes who will eventually receive your assets. It also makes known how you want your affairs to be handled in the event you are unable to handle them on your own for any reason. It’s a complicated process, and it can definitely feel overwhelming. There are many components to Estate Planning, and while there’s a common misconception that it’s just about your finances, the truth is there’s a lot more to it.
There’s no denying that Estate Planning seems like a daunting chore, but it’s something we all need to face. We’ve broken the process down into easy-to-understand sections. Following our Estate Planning 101 guide will give you the security that comes with knowing you’ve planned for the future of your loved ones.
Estate Planning is simply the process of making it clearly known how you want your estate to be handled after you pass or if you’re incapacitated and unable to handle things on your own. The most common Estate Planning definition is — "the process of making plans for the management and transfer of your estate after your death, using a Will, Trust, insurance policies and/or other devices." Estate Planning has been around for many years, but it’s becoming increasingly more and more common.
There are many parts of Estate Planning, but the first thing you must do is conduct a comprehensive review of your estate assets. Your estate is made up of all the property you own, including:
After you have a clear idea of what your estate is made up of, you can then begin planning.
Estate Planning is important for many reasons. Perhaps the biggest benefit is if you don’t properly prepare for what should happen in the future while you’re sound and capable, you’ll have no say in how your estate is handled or what your loved ones receive when that time comes. Planning today ensures your tomorrow is exactly as you envision it.
A properly prepared Estate Plan will lay out your wishes exactly, in the most tax-advantage manner, so you can trust there won’t be any questions, misunderstandings or misconceptions about what you want.
Several documents will make up your Estate Plan. Each is important in its own way, and together they form a powerful representation of your final wishes.
States what you want to have happen and who you want to care for your children or any other dependent you’re responsible for after your death or in the event you’re no longer able to care for them. Most often, instructions for guardianship will be included in a section of your Will.
A legal document that expresses your last wishes for distribution of your property or other assets.
A legal three-party fiduciary agreement that allows the first party (the Settlor, also may be referenced as Trustor or Grantor) to give the second party (the Trustee) rights to hold assets and property on behalf of and for the benefit of the third party (the Beneficiary).
A legal document that gives someone the power to handle your financial affairs.
A variation of a Financial Power of Attorney, which is a document that gives legal rights to another person so they can handle any of your non-health or non-medical affairs. “Durable” simply means that even if you become incapacitated, the POA remains in effect.
Also sometimes referred to as a Living Will or a Medical Power of Attorney. An Advance Healthcare Directive directly states what, if any, medical actions should be taken if you become incapacitated and unable to make your own decisions.Note: it’s important to understand that while the terms “Living Will,” “Medical Power of Attorney” and “AHCD” are commonly used interchangeably, there are legal distinctions between them.
Consent you give that allows your medical records or information to be shared with a third party.
Much of your Estate Planning is done with taxes in mind. The ultimate goal is to leave the absolute most you can to your heirs. Strategizing by taking action to minimize assets lost to taxes is an effective way to achieve your goal. There are some tools you can use within your Estate Plan, including ways to avoid probate and pass assets while avoiding hefty taxes. Understanding potential types of taxes is important.
Short answer: Everyone. It’s easy to try and convince ourselves that we don’t need an Estate Plan. But the reality is, we would all be better off if we were planning a little more for our future. You don’t need to be wealthy, or elderly or even have a specific amount in your bank account to justify the need for a valid Estate Plan. If you are over the age of 18, you should start thinking about creating a plan.
Even if you don’t have a lot of assets, your Estate Plan is a guarantee that everyone will know what your wishes are. Health directives and long-term healthcare wishes are perfect examples of this – if you were ever to become incapacitated and couldn’t make your wishes known, your Estate Plan will speak for you, so your loved ones don’t have to make unthinkable decisions or wonder what you would want.
It used to be that properly preparing the types of documents that go in an Estate Plan could cost you thousands. But now you have options. You can get an affordable, legal, effective, valid Estate Plan that ensures your wishes will be known should the time ever come it’s needed. Even if you don’t have a lot of assets, an Estate Plan is still a wise idea.
Yes, there are a lot of steps that go into creating a complete Estate Plan, but we’ve made it as easy as possible for you by listing each out.
Take caution when developing your Estate Plan. There are many mistakes that could result in delays, inaccuracies or other misunderstandings. Some of the common mistakes people make along the way include:
While many people think simply having a Will is sufficient, the fact is you need more. If you have a Will, you’re off to a great start. But a Will by itself is just a small piece of the Estate Planning puzzle. In order to fully protect your loved ones after you pass, you must incorporate all the documents, nominations and appointments to ensure you’ve done everything you can to make the process easier on them when the time comes.
A Beneficiary designation is a way to designate where your assets go after you pass.
A Trustee handles and is responsible for managing all assets or property in a Trust. In essence, he or she is the legal owner of said assets.
The cost of creating an Estate Plan can widely vary, depending on a number of factors. If you go the traditional route and work face-to-face with an attorney, your cost will be much higher. Newer methods of Estate Planning include innovative and creative platforms like Trust & Will, where you can get a legal Estate Plan at a fraction of the cost.
A method of combining services such as Trust & Will with EstateSync can provide a robust and secure plan for everyone.
In some cases, you do not need an attorney to create your Estate Plan. If you have a very complicated estate, you may opt to go the traditional face-to-face route. But many people have simple, straight-forward needs. They may find a service like Trust & Will is ideal for their Estate Planning needs. It can save time and money while still offering a superior product that touches on all the important things you want to take care of with your Estate Plan.
Though there are many parts to a complete Estate Plan, tackling them one at a time is the best way to draft a plan that’s conclusive, comprehensive, thorough and that protects everyone in your life you love.
Source:Trust & Will
