Estate planning is the process of developing a comprehensive plan and the appropriate documents to direct what happens to you and your assets as you age. From protecting your financial goals to providing for your family, clearly defining all the details in advance provides excellent peace of mind—and doesn’t leave anything to chance according to what the probate courts decide. Partnering with an experienced estate planning lawyer is the perfect first step to understanding what will work best for your needs now and in the years to come.
5 Basics of Estate Planning
Estate planning isn’t a “set it and forget it” deal. Young parents who need to establish guardianship of their children and financial trusts for their care have vastly different needs than a retired person selling their family home and restructuring their assets to provide generational wealth. Whatever stage of life you’re in now, what’s most important is to work with a professional who can get you started on the path of security. Over time, as your personal and family circumstances change, your estate plan should be reviewed and updated regularly.
Here are some of the documents your estate planning attorney may recommend.
A will
Regardless of your age or income level, it’s essential to outline in a will what you want to happen with your assets and the beneficiaries of your estate. In most cases, after someone dies, the state moves forward with a court-supervised proceeding known as probate. When you have a will, the state authenticates the document, approves your assigned executor, and assesses the value of all your assets. Once taxes and debts are paid, the court allows the executor to distribute assets to your designated beneficiaries.
However, if there’s not a valid will and other declarative documents, probate proceedings become more difficult—and the courts decide what happens with your assets. This is an incredibly complex, lengthy, and costly process for your loved ones to endure in addition to their grief.
The good news is a well-constructed estate plan may help your heirs avoid the probate process altogether.
A living will
Also known as a medical care directive, a living will clarifies what medical procedures should or shouldn’t be performed if you’re near the end of life. This is often combined with a healthcare power of attorney in what’s referred to as an advanced healthcare directive.
Guardianship for dependents
No one wants to believe they won’t be able to provide for their loved ones, but it happens. In the event of your incapacitation or death, a formal guardianship plan alleviates any concerns regarding the welfare of your family members. Guardianship extends to aging parents you care for, minor children, a loved one with special needs, or any other dependents.
Various types of trusts
A trust is a method to hold money for your heirs or other beneficiaries. You decide what it’s for, what assets are secured within it, and how they’re distributed. Depending on your needs and goals, your estate planning attorney may discuss the benefits of revocable, irrevocable, and charitable trusts.
Durable power of attorney
There are many types of power of attorney, each with unique duties. However, a durable power of attorney is usually advisable because it allows you to designate someone, known as an agent, to act on your behalf in both medical and financial matters if you become incapacitated.
At different stages in your life, you and your estate planning lawyer might also need to consider additional options for your strategy, such as paying for long-term care, how to give financial gifts to family members, and more.