An estate plan is a set of legal instructions explaining what will happen to your assets and how they will be transferred after you die. Your estate includes all the property you own, from cars to houses to jewelry to life insurance. While estate sizes vary dramatically, everyone has one.
Most people have at least vague desires that their belongings go to specific loved ones or loved causes, and no one wants their family to experience additional heartache while grieving. If you don’t establish an estate plan, you lose control of what happens to your property after you pass away. Therefore, it’s crucial to put in the time and effort to ensure you develop a plan before you need one. Read on to get more of your estate planning questions answered.
What is a Will?
The most important document in your estate, your will outlines your property and how you would like it distributed. It also may explain guardianship directions for your children and include requests for your memorial, funeral, and burial.
While trusts and wills are similar, a trust is slightly different. Trusts go into effect while you are still alive and follow different procedures for what property is included and how it is distributed. To find out which document is best for your specific situation, contact an estate planning attorney in your area.
What Else is Included in an Estate Plan?
In addition to a will or trust, your estate plan should also include a power of attorney (POA), which gives someone else the power to act on your behalf in the event that you cannot do so yourself. Since this person will be allowed to make important legal decisions as if they were you, be sure you trust them and that they understand clearly what your wishes are.
There are two primary types of POA:
- Durable power of attorney: a person or organization of your choosing can make financial and legal decisions regarding your property.
- Healthcare power of attorney: a designated person is allowed to make all health care decisions for you if you are unable, including whether to keep you on life support.
Who Needs an Estate Plan?
In short, everyone. Sometimes people who are young and healthy don’t think they need an estate plan yet, while people who don’t own many assets tend not to view estate planning as necessary. But these are misconceptions: contrary to popular belief, estate planning is not just for the old or wealthy. If you are an adult with any kind of property—investments, savings, cars, life insurance—you should create an estate plan sooner rather than later.
How do I Set Up an Estate Plan?
It can be tempting to try to do it on your own to try to save money, but this is not recommended. Having a trustworthy attorney who has knowledge and experience in estate planning is your best option. The investment of working with a lawyer will ensure you’re following best practices, decrease your likelihood of making a critical error, and help you learn about this legal process.
At the time of writing, the coronavirus (COVID-19) pandemic rages on, making many people start thinking more seriously about future plans. While you want to avoid setting up an estate plan while you’re too stressed or emotional, for many, now is the time. Some law firms are even offering free estate planning to medical professionals and first responders during this time. During a time of great anxiety and uncertainty, knowing your affairs are in order can provide a certain stability and peace of mind.
What Happens if I Don’t Have One?
Without an estate plan, you have no way of knowing for sure what will happen to your property after you die. Worse still, your surviving family members may have to make painful decisions, face enormous tax burdens, or have difficulties in probate court. Our infographic visually displays what will happen in different situations, depending on which types of surviving relatives you have. In some circumstances, the government can end up with your property, or it may end up being used in ways you wouldn’t have wanted.
In any case, the best course of action is to set up an estate plan with the help of a skilled attorney. Then you will have peace of mind, knowing that you’re prepared and your loved ones will be provided for in the event of a tragedy. Any time and money you invest in doing this now will pay off in the long run by providing security and preventing significant legal hassles later on.