Working on your estate plan should be your priority to ensure all your assets will go to the right recipients.
Many overlook the importance of estate planning until it’s too late. The reality can be sad, but most people fail to take timely action regarding their estate. For many, thinking about the future, especially end-of-life issues, can be dismal, and most tend to ignore it.
However, it’s time to change your mindset regarding estate planning. You can consider it an additional way to secure the future of your estate. This gives you peace of mind, knowing that everything you have will end up in good hands.
Meanwhile, if it’s your first time coming across estate planning, it’s generally creating an estate plan. If you want to ensure you’re on the right track with estate planning, working with Two Spruce Law P.C., and other similar legal professionals specializing in estate planning is a good starting point.
An estate plan includes many documents indicating what will happen to your possessions if you pass away. It also includes special instructions—especially once you reach old age when you can no longer decide on crucial matters.
On the other hand, some people believe that having a will is already equivalent to having an estate plan, but there’s more to learn about estate planning. If you want to know more about what an estate plan is, watch this video:
Estate planning is worth considering as early as possible. However, it becomes even more important once you go through significant life events, such as investing in a house, marriage, or having children. Once you’re ready to tackle estate planning, here are the essentials you need to be familiar with.
What Is An Estate?
An estate covers everything you own, ranging from money, belongings, and investments. Many have the misconception that an estate is only for the wealthy. However, regardless of your status in life, each individual holds an estate.
An estate can be your vehicle, collectibles, bank accounts, and furniture, to name a few. Understandably, everything you have can be considered your estate. A straightforward estate plan is typically enough to ensure that your estate is safe and properly distributed to the rightful recipients in the event you pass away.
Generally, an estate plan usually includes a will, healthcare power of attorney, living will, trust, and financial power of attorney. The main point of having an estate plan is knowing where your estate will go.
If you overlook the importance of estate planning, it can cause fights or misunderstandings among family members about who’ll receive what portion. In worst-case scenarios, your estate might go to the state instead of your family members.
Importance Of An Estate Plan
An estate plan is crucial for several scenarios, especially when you don’t want to add a burden to your family once you pass away. These scenarios include having young children who require a guardian, owning several properties, and having issues with the transfer of taxes.
Keep in mind that estate planning isn’t only for the wealthy. Even if you consider yourself to have a minimal estate, having an estate plan is more crucial than ever. It’s important to remember that your estate will cover the final expenses. Inevitably, your family will shoulder the remaining amount if you have insufficient funds to cover the total cost.
Meanwhile, regardless of how old you are right now, it’s never too early or late to have one. When you end up in dire circumstances that result in your untimely passing without an estate plan, the government will be the one to decide what happens to your assets. And there’s a possibility that the government’s decision might not align with your wishes.
On the other hand, one of the advantages of considering estate planning early on is to save your family any hassle, especially once you establish your financial and health care instructions. Ideally, you can start with a simple estate plan. It might require updates now and then, especially as you age or go through major life events, to ensure it still aligns with your wishes.
Advantages Of An Estate Plan
An estate plan is worth considering if you want to ensure your family stays secure even if you pass away untimely. Remember that having an estate plan can provide you with several benefits. Here are some of them:
- Designates an executor to carry out your affairs and wishes after your death.
- Designates a guardian for your children.
- Ensures your assets have adequate protection in case of future divorces.
- Ensures transfer to the selected beneficiaries for your properties and businesses.
- It can help avoid the lengthy probate process.
- It helps cut down on estate taxes.
- It helps maintain the value of your trust.
The Crucial Documents In An Estate Plan
Although an estate plan will vary and caters to specific needs, most are likely to include the following documents:
- Last Will
The last will outline your specific wishes on the recipient of your assets once you pass away. It also includes instructions on selecting a guardian for your children in circumstances that require one.
- Trust
A trust is a legal setting that enables a third party or mediator to take charge of your assets. You can have it tailored to your specific needs. One of the benefits of establishing a trust is that the beneficiaries will no longer need to go through the probate procedure, ensuring faster access to the assets.
- Living Will
A living will typically contain information about when to perform cardiopulmonary resuscitation (CPR) or opt for a do-not-resuscitate (DNR) option. It also includes information on whether to undergo life support and donate organs, to name a few.
Generally, a living will take effect after it’s signed or if you’re no longer capable of conveying your wishes.
- Healthcare Power Of Attorney
A healthcare power of attorney, healthcare directive, or healthcare proxy allows an individual you designate to make healthcare-related decisions in case you’re no longer capable. Generally, it works together with a will.
- Financial Power Of Attorney
The financial power of attorney is a critical document in an estate plan since it appoints an individual to be in charge of your finances if you end up sick or incapacitated. A crucial tip to consider is accurately stating your designated individual’s powers and limitations.
Furthermore, you can provide an overview of your financial information and your needs to the individual in charge of managing your finances. Doing so will ensure that the designated person understands your specific requirements and how to fulfill them.
The estate planning process can be challenging if you’re unfamiliar with how the procedures work or how to gather all the necessary documents. It would be best to employ a legal professional specializing in estate planning to provide you with the right guidance if you have concerns or questions about managing your estate.
How To Execute Your Estate Plan
Once all the required documents are ready, it’s crucial to scrutinize all the details and follow the requirements carefully. Remember that every state will have specific requirements in executing an estate plan.
In most cases, for the last will to be considered valid and official, it involves signing in the presence of two witnesses. Next, the accompanying estate planning documents must be properly notarized. Also, it’s best to deal with all the estate tax obligations to avoid any inconveniences in the future.
Although it might entail some effort on your part, going through the estate planning is a worthwhile decision. Once everything is in place, executing your estate plan is the last crucial step to ensure it functions how you want it. When everything is settled, make sure you store your estate plan paperwork securely and safely.
A Close Look At Probate
Knowing a thing or two about probate is crucial in estate planning. Generally, it’s a verification process to establish that your will is legal. Many people believe that having a will can help steer clear of probate. Nonetheless, it helps smoothen the process since the court will use it as a guide in carrying out your specific wishes.
Meanwhile, a simple estate plan is likely to go through probate quickly. Unfortunately, it can become a lengthy process when someone contests your will. This happens when a person challenges what you’ve indicated in your will.
An example is when a family feels excluded from being a beneficiary or asserts that they deserve more than what they’ll receive. This situation can prolong the probate, usually reaching months. It can also become an expensive ordeal due to the lawyer and court fees.
Final Thoughts
Estate planning is worth considering regardless of what state of life you’re currently in. If you feel you don’t need one yet, it may be time to think twice to secure your estate’s future.
Working on your estate plan should be your priority to ensure all your assets will go to the right recipients. It also gives you the assurance that your family won’t end up in disarray once you pass away. With the help of these valuable essentials of what estate planning entails, it can help you make the right decision and ensure everything is in order in case of an untimely passing.
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