Estate Planning: What? When? Why? How?
During your lifetime, estate planning is the process of arranging for the management and disposal of your estate should you become incapacitated or after your death.
It's important to note that estate planning is for everyone, as nearly everyone has an estate. Your estate is made up of your tangible (car, home, etc.) and intangible (checking/savings accounts, etc.) possessions. No matter how large or how modest your estate is, the best time to start planning is always now.
A common misconception is that not everyone has an estate worth planning after, or that only those who are extremely affluent and asset-rich are the only people who can plan for their estate. This is not the case, as estate planning is for everyone, as nearly everyone has an estate to look after.
An efficient estate planning will not only allow you to allocate your assets when you pass, but it will also:
· Include instructions for passing your values
· Include instructions for your care if you become disabled before you die
· Name a guardian for minors
· Provide for family members with special needs without disrupting government benefits
· Minimize taxes, court costs, and unnecessary legal fees
· Be an ongoing process, not just a onetime event.
A comprehensive estate plan will include:
1. Last Will and Testament: “Your ticket into probate,” it sets forth your wishes regarding the distribution of your estate and the care of any minor children, if applicable. It must be notarized and signed in the presence of witnesses.
2. Power of Attorney: Allows you to select a person of trust that will make decisions on your behalf if you are ever incapable of making financial or health-related decisions. Must be notarized and signed in the presence of witnesses.
3. Advance Directives: This is a package of documents that includes Living Will, Healthcare Surrogate, and Pre-need Guardian.
i. Living Will: A living will is a document that states your wishes in health related scenarios; it lets you say exactly what you want to be done to you in certain situations. Must be notarized and signed in the presence of witnesses.
ii. Healthcare Surrogate: A Healthcare Surrogate is a document that allows you to appoint a person who will make healthcare decisions for you when you are unable to make them for yourself. Works hand in hand with your Living Will as the wishes in your Living Will are expected to be honored by your Healthcare Surrogate. Must be notarized and signed in the presence of witnesses.
iii. Pre-need Guardian: A Pre-need Guardian is a person who is appointed by you that designates who will serve as your guardian if you are ever determined incapacitated by a court. It allows people to take control over who will become their guardian, rather than have it be appointed by a court. Does not need to be notarized but must be signed in the presence of witnesses.
4. Depending on your estate, a Trust may also be a part of your Estate Planning packet.
No matter how large or how modest your estate is, the best time to start planning is always now. Estate Planning allows us to take control of our lives, even when we are no longer in control.