Estate planning isn't an exciting subject matter, but it's an important one.
Also, it's important to know that estate planning is for everyone. It doesn't matter what the market value of your house is, what the balance of your savings account is, or the type of car you drive. Everyone has assets, and it's important to make sure your loved ones receive everything you want them to in the event of your passing.
Here's why estate planning is important.
Why is Estate Planning Important?
Estate planning is important for many reasons.
If you're looking for the short answer: estate planning protects your possessions, ensures your family members receive everything you want them to, and establishes guardianship for children under 18.
For the more in-depth answers, here's why estate planning matters.
It Protects Your Family & Possessions
First and foremost, it protects your family and possessions.
A sound estate plan will benefit those you care about financially by transferring your assets to them. It will also help them emotionally by eliminating the stress of handling the allocation of assets themselves.
Establishes Guardianship for Children Under 18
If you leave behind a child under 18, your estate plan should include a guardianship designation. The guardian designation states who will become their guardian. Without it, a court will decide the fate of your child without knowing the family dynamic or history. Having a guardianship designation ensures your child will go to the caretaker you prefer.
Ensures the Court Doesn't Decide How Your Assets are Allocated
The same is true for your possessions. If you don’t detail where you want your assets going in a trust or will, the court will distribute them on your behalf.
You undoubtedly want a say in who gets your belongings and children. An estate plan is the only way to guarantee they go to people you trust.
Grants Power of Attorney if You Become Incapacitated
An estate plan also establishes power of attorney in the event you become incapacitated.
If the worst-case scenario happens – meaning you become incapacitated for some reason and are unable to care for yourself – your estate plan dictates who should be in charge of your medical and financial decisions.
A key part of this aspect is that the estate plan must have been set up when you had sufficient mental capacity. This is a huge reason why it's important to set up an estate plan as soon as possible, rather than waiting until it's too late.
For example, if you're taking care of an elderly parent who is now mentally incapacitated and doesn't have an estate plan, it's no longer possible for them to give you power of attorney.
Do I Need an Estate Plan?
You aren't legally required to have an estate plan. However, we believe an estate plan is necessary for adults of all ages, regardless of the monetary value of your assets.
Plus, your loved ones will be thankful if you set up a strong estate plan. Some of the benefits of having an estate plan (besides what has already been mentioned) include:
Speeding up disbursement process
Lower taxes and expenses
Potential to avoid probate
Prevent family arguments over possessions
Estate Plan Basics
So now that you know why an estate plan is important, it’s time to learn the basics.
While it’s not required, we highly recommend hiring an estate planning attorney. It’s a guaranteed way to ensure everything is covered in your estate plan. They’ll also go through every document to make sure it will be accepted in court.
An important part of your estate plan is to take inventory of your assets. The more you can log before hiring an attorney, the sooner you can complete your plan.
You need to establish goals for your plan and determine where you want your assets to go.
Since estate planning isn’t required, there isn’t a definitive guide for what to include in your plan, but we recommend the following:
Last Will and Testament
Power of Attorney
Power of Medical Attorney
Need Help Creating an Estate Plan?
If you need help planning your estate, look no further. Our experienced estate planning attorney is here to help. Contact us today to start your estate plan.