Estate planning is the process of anticipating and arranging for the management and disposal of a person’s estate during their life in preparation for future incapacity or death. Believe it or not, you have an estate. Almost everyone does. Your estate consists of everything you own: your car, home, other real estate, checking and savings accounts, investments, life insurance, furniture, and personal possessions.
No matter how large or modest, everyone has an estate and something in common – you cannot take it with you when you die. When that happens, you probably want to control how those things are distributed. To ensure that your wishes are executed properly, you must provide written guidance. This is estate planning – making a plan in advance, naming the people or organizations you want to receive the things you own after you die, and taking steps now to make carrying out your plan as easy as possible later.
Good estate planning should also do the following:
1. Include instructions for your care and financial affairs if you become incapacitated before you die;
2. Include arrangements for disability income insurance to replace your income if you cannot work due to illness or injury, long-term care insurance to help pay for your care in case of an extended illness or injury, and life insurance to provide for your family at your death;
3. Provide for the transfer of your business at your retirement, disability, incapacity, or death;
4. Name a guardian for your minor children’s care and inheritance;
5. Provide for family members with special needs without disqualifying them from government benefits;
6. Provide for loved ones who might be irresponsible with money or who may need protection from creditors or in the event of divorce; and,
7. Minimize taxes, court costs, and unnecessary legal fees, which may include funding assets into a living trust, completing or updating beneficiary designations, or otherwise aligning your assets with your estate plan.
Estate planning is an ongoing process, not a one-time event! You should review and update your plan as your family and financial circumstances (and the relevant laws) change during your lifetime.