What Is Estate Planning?
A strictly legal definition of estate planning is that it is the process of:
- arranging your assets;
- planning how they will be distributed when you die; and
- preparing legal documents to enforce your wishes after you are gone.
But a more holistic and practical outlook on estate planning is that it is the process of ordering your life for your incapacity and death. This means a lot of different aspects of life become involved in estate planning.
Many people become incapacitated to some degree and need help before they pass. We use documents like advance medical directives and powers of attorney to prepare for incapacity. Legal tools such as wills, trusts, beneficiary designations, and more are used at your death. They each use different methods to distribute your assets the way you want and to whom you want.
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What Does an Estate Plan Include?
There are many details involved in estate planning, but the most effective estate planning includes four key components:
- Creating a combination of legal documents that will accomplish your goals for you, your loved ones, and your assets
- Creating several non-legal documents that will guide your personal representative and your loved ones through your estate plan when you pass
- Communicating with your personal representatives and agents so they understand what they will need to do when you pass
- Maintaining your estate planning documents as you age and your life and relationships change
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Why Is Estate Planning Important?
Estate planning is important because:
- You need an estate plan to distribute your assets. If you don’t, the government will distribute them for you.
- You need an estate plan to care for your loved ones. Oftentimes, you have more influence and ability to help others than you realize.
- You need an estate plan to be prepared for the future. None of us know when we will become ill or pass away. If you want to be prepared for whatever may happen, you need an estate plan.
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Although there is much involved in estate planning, don’t let it overwhelm you. Our estate planning firm specializes in simplifying the process and helping you walk through it.
Take your first step and contact us here for a free estate planning consultation.
