Estate planning has many purposes.
Few people believe they have an estate.
This would be true if they define an estate as having a mansion with land and servants.
Think Downton Abbey.
With this definition, very few would qualify.
When it comes to estate planning, there is far broader definition of an estate.
According to a recent The Military Wallet article titled “How to Plan Your Estate,” the legal definition of an estate in America is everything a person owns.
Do you have personal property like furniture, a car, or a home?
Do you have intangible assets like bank accounts, investment accounts, retirement accounts, or insurance policies?
If you answered “yes” to any of these questions, you have an estate and also should have an estate plan.
Although distributing your stuff is important to estate planning, other aspects are also helpful.
What are these?
Without an estate plan, the state may choose who inherits from you.
This could mean certain loved ones will be disinherited while estranged family members inherit.
If your desire was to provide some support to a charity, this will not happen without an estate plan in place.
Protecting your children.
Estate planning is vital to supporting the future of your children.
Minors are vulnerable after the death of parents.
You should use a last will and testament to designate a guardian for your minor children, let alone protect and provide for adult children with special needs.
By taking this action, you will decided who will care for your children if you cannot.
Protecting against conflict.
By providing details to clarify your estate plan, you can reduce confusion and arguments.
Everyone will be clear on what you wanted.
Prior to meeting with an estate planning attorney, you should create an asset inventory.
You should include real estate, vehicles, life insurance policies, bank accounts, investments accounts, retirement accounts, health savings accounts, jewelry, collectibles (e.g., your “ceramic bullfrog collection), valuables, digital assets with their usernames and passwords, and cryptocurrency and how to access these accounts.
It is helpful to note all accounts with beneficiary designations and review these after major life changes like divorce, marriage, births, or deaths.
Preparing for different scenarios.
No one can accurately predict the outcomes of their own lives.
Death and illness can strike unexpectedly.
The old must die and the young may die.
Estate planning allows you to prepare for a variety of circumstances.
With a last will and testament, you can choose who will inherit what, name guardians for minors, and choose an executor for your estate.
An advance health care directive, which includes a health care treatment directive and a durable power of attorney for health care decisions, allow for you to outline your end-of-life care wishes and appoint someone to talk with doctors and make decisions if you are incapacitated.
With a general durable power of attorney, you can grant authority to a trusted individual to manage your finances should you become incapacitated.
Estate planning is essential to protecting everyone you love and everything you have.
Reference: The Military Wallet (Aug. 25, 2022) “How to Plan Your Estate”