Estate planning isn’t reserved for the wealthy. Everyone has an estate.
Your estate is made up of all the things you own from your car and house to bank accounts, insurance policies, and even personal belongings. Regardless of the value of someone’s estate, one thing is true across the board – you can’t take these things with you when you die.
That’s why you need an estate plan. Planning ahead guarantees your precious items end up in the hands of those you want. It also prevents family and loved ones from fighting over property and assets after you’re gone.
Ready to learn what is an estate plan and how to create one? Grab a list of your belongings and let’s get into it!
What is Included in an Estate Plan?
Before we can discuss how to create your estate plan it’s important you know what it should include. The thought of listing every single item you own might seem overwhelming.
Take a breath, sit down, and make a list of the major items including (but not limited to):
- Personal items (keepsakes, jewelry, furniture, clothing, etc)
- Savings accounts and insurance policies
- Real estate (both commercial and residential)
Your estate plan should also include non-tangible items. The following are important guidelines to cover:
- Choosing a guardian for your children and/or pets
- Selecting a healthcare power of attorney
- Instructions for your medical care
- Letter of intent
Since there’s no proven way to communicate from beyond the grave, your estate plan and will are the only two documents that family, friends, and attorneys have to ensure your last wishes are followed.
Find an attorney you trust and feel comfortable with like the professionals at Lees & Lees.
What is an Estate Plan vs. a Will
People often confuse an estate plan with a will but the two documents have some major differences.
The biggest difference between an estate plan and a will is that the former includes information about your care and outlines your wishes (financial, health, and other), while you’re still living. A will doesn’t normally come into play until after your death.
If you’re facing a terminal illness or have specific wishes regarding your healthcare toward the end, it’s in your best interest to create an estate plan.
Things to Consider
Now that you know what estate planning is, here are a few things to keep in mind as you draft the paperwork.
Consider Your Relatives’ Personalities
One reason for creating these types of directives is to prevent arguments between family and friends. But despite your efforts, things may not go as planned.
When designating beneficiaries and powers of attorney consider the personalities of the players. Are one or more of your children at odds? Is one family member more compassionate than another?
You don’t need to justify your decision to anyone. Choose the best person for each task and pass important items onto those you know will appreciate them most.
Create a Trust
Another major concern people have when it comes to estate planning is that the state is going to take their assets before loved ones ever see them. Sadly, this does happen but you can help prevent it by creating trust.
When you create a trust, assets are held aside during your lifetime. After death, these assets are then passed onto the rightful beneficiaries.
A trust helps eliminate the amount of taxes taken from your estate. Assets in a living trust also avoid probate, a complicated and expensive process.
Review and Update Your Estate Plan Periodically
Creating an estate plan isn’t a one-time deal. You should revisit and update your estate plan periodically.
Things change – both personally and financially. Make sure that the most updated version of your estate plan best reflects our current situation and feelings.
Create an Estate Plan That’s Right for You
Don’t be fooled into thinking your assets don’t warrant protection after your death. Your personal items and assets are just as valuable as the next persons’.
If you’re still asking, “what is an estate plan?”, schedule a consultation with an estate attorney who can explain all the components.
In the meantime, continue living your best life and check our blog regularly for advice on doing just that!