Believe it or not, you have an estate. In fact, nearly everyone does. Your estate is comprised of everything you own— your car, home, other real estate, checking and savings accounts, investments, life insurance, furniture, personal possessions. No matter how large or how modest, everyone has an estate and something in common—you can’t take it with you when you die.
When that happens—and it is a “when” and not an “if”—you probably want to control how those things are given to the people or organizations you care most about. To ensure your wishes are carried out, you need to provide instructions stating whom you want to receive something of yours, what you want them to receive, and when they are to receive it. You will, of course, want this to happen with the least amount paid in taxes, legal fees, and court costs.
That is estate planning—making a plan in advance and naming whom you want to receive the things you own after you die
How is it beneficial?
Good estate planning is beneficial in many ways. It:
1. Includes instructions for passing your values (religion, education, hard work, etc.) in addition to your valuables.
2. Includes instructions for your care if you become disabled before you die.
3. Names a guardian and an inheritance manager for minor children.
4. Provides for family members with special needs without disrupting government benefits.
5. Provides for loved ones who might be irresponsible with money or who may need future protection from creditors or divorce.
6. Includes life insurance to provide for your family at your death, disability income insurance to replace your income if you cannot work due to illness or injury, and long-term care insurance to help pay for your care in case of an extended illness or injury.
7. Provides for the transfer of your business at your retirement, disability, or death.
8. Minimizes taxes, court costs, and unnecessary legal fees.
9. Is an ongoing process, not a one-time event. Your plan should be reviewed and updated as your family and financial situations (and laws) change over your lifetime.
What does IT Comprise of?
Your estate plan should probably include some form of a trust, a power of attorney covering medical care and finances, a health care directive and a will and testament.
1. A trust is a legal relationship involving you (the trustor), a trustee, and one or more beneficiaries. There are many purposes of a trust, one of the most important of which is to avoid probate if you die.
2. A power of attorney is a legal document giving somebody else power to act on your behalf. You should probably create a power of attorney covering your own health care and your finances, in case you are ever in an accident and you are unable to make those decisions on your own behalf.
3. A health care directive is an instruction form that you fill out in case you are ever incapacitated to the point where you can't make your own decisions regarding your medical care. For example, you could instruct in advance that if you are ever on life support for more than two consecutive weeks, you should be removed from life support.
4. A will and testament is the document that specifies what happens to your estate when you die. Your estate is the aggregate of all of your property and all of your debts.
Is IT For Me?
Estate planning is for everyone
It is not just for “retired” people, although people do tend to think about it more as they get older. Unfortunately, we can’t successfully predict how long we will live, and illness and accidents happen to people of all ages.
Estate planning is not just for “the wealthy,” either, although people who have built some wealth do often think more about how to preserve it. Good estate planning often means more to families with modest assets, because they can afford to lose the least.
To all this, what's the cherry on the top?
The best time to plan your estate is now.
None of us really likes to think about our own mortality or the possibility of being unable to make decisions for ourselves. This is exactly why so many families are caught off-guard and unprepared when incapacity or death does strike. Don’t wait. You can put something in place now and change it later…which is exactly the way estate planning should be done.
The best benefit is peace of mind.
Knowing you have a properly prepared plan in place - one that contains your instructions and will protect your family - will give you and your family peace of mind. This is one of the most thoughtful and considerate things you can do for yourself and for those you love.
