What is estate planning? Estate planning is, simply put, the act of planning what happens to your estate when you pass away. When you begin to create your estate plan, you consider all of your assets, all of your debts, and what you wish to happen to them upon your death. Estate planning also typically considers your wishes if you are to become incapacitated and unable to make decisions on your own.
Your estate plan can consist of a variety of documents, including a will, trust, power of attorney, and healthcare surrogate just to name a few. Each of these documents serves a different purpose, and you should give thought to each one as you create them.
Estate planning can direct certain assets to go to certain family members, charities, or friends upon your death. If you have minor children, an estate plan should appoint guardians for them. It can also help to minimize the gift tax, generation-skipping tax, and estate tax. You are able to direct funeral arrangements in your plan. It also serves as a time for you to ensure life insurance policies and retirement accounts have the correct beneficiaries listed.
When planning for your incapacity, it should outline who you wish to have control over your financial and healthcare decisions. You can appoint the same individual, or you can appoint several different ones. You can give them a lot of power, or very little power.
There are many parts to an estate plan. Therefore, there are many different ways to create one, and yours should always be unique to your circumstances. However, by taking these steps while you are well, you have control over things if/when you become incapacitated or pass away. A local attorney can help you create the perfect plan for you and your family.