The essence of planning out your estate lies in a simple desire: to protect your assets and the items you value. Estate planning, then, means the proper preparation of a person’s wealth—mainly assets—for transfer to someone, or others (relatives), following a person’s death.
What is Included in Estate Planning?
Estate planning generally involves deciding how to handle your estate upon your passing. Assets, life insurance, real estate, automobiles, pensions, personal belongings, and even debts can be part of a person’s ‘estate.’ So, when people come to an attorney to ask, “What should I plan for?” an appropriate answer would be—everything you own and value and/or are responsible for (e.g. debt).” Yet, that’s just a start. Research shows there are at least four essential ‘strategies’ you might want to consider before meeting with your estate planning attorney to produce documents that will protect your wishes after you pass away.
Four Essentials of Estate Planning
- Take a good second-look at your life insurance situation.
If you are supporting someone and will be doing so for the future years to come, you should have enough life insurance coverage to meet the expenses your family will have to face. To estimate how much life insurance is right for you, consider the expenses your dependents will have, now and even in the future. From covering expenses until your family adjusts to your missing income and settling your debts (mortgages and car loans included) to education expenses and savings goals, these types of costs should be considered when selecting an insurance coverage.
- Establish at least three medical directives.
These will delegate control of your health according to your plan, even if you are unable to voice them.
- Living Will: Describes medical treatments and/or procedures you do or do not want to be used, including procedures or treatments designed to prolong or restore your life. A living will also dictates your decision about other medical decisions, such organ donation.
- A Durable Power of Attorney: Appoints the person you prefer to manage your finances and distribute assets according to your wishes.
- Medical (Advanced) Directives: Allows someone, much like a power of attorney, to make medical decisions for you if you arrive at a condition where you cannot make those decisions for yourself.
- Establish a trust for simplified transfer of ownership.
A trust enables you to name beneficiaries for certain assets of your estate, particularly financial assets, and enable the transfer of such assets immediately upon your passing (or at a time specified in the trust). Assets in a trust do not have to go through probate for the directives provided within to be carried out.
- At a minimum, have a will.
A will is a legal document that enables you to distribute your assets and personal property as well as provide other directives, such as naming a guardian for your minor children, specifications for your burial, or passing on the family business. Without a will, your estate will be distributed by the courts.
No one wants to think about their own mortality, but the fact is that each and every one of us will die someday. If you want to make sure your loved ones are taken care of after you’re gone, it’s important to have an estate plan in place. This doesn’t mean you have to be wealthy – everyone can benefit from having a basic estate plan in place.
That is why, one of the most important aspects of estate planning is creating a will. This document will dictate how your assets will be distributed after you die. If you don’t have a will, the state will create one for you – and it may not be what you would have wanted. A family lawyer can help you create a legally binding document that reflects your wishes.
Luby Myrthil, P.A. routinely handles probate cases and assisting clients with establishing the necessary documents of estate planning. You owe it to yourself to plan out your asset distribution under the consultation of an attorney, so you can be assured your estate is distributed how you want it to be.