Often, will and estate planning are viewed as setting up who gets what after you pass on. While this is certainly part of it, there is more to consider, some that may involve decision-making while you are still alive. In this article, we’ll cover:
- What is estate planning?
- Estate planning basics
- Planning a will
What is Estate Planning?
Estate planning involves three basic components:
- Medical decision-making, which may involve treatment decisions or end-of-life decisions.
- Asset distribution.
- Guardianship for minor children.
An estate plan addresses each of these, providing guidance at a time when making decisions can be hardest. It also ensures that what you want is done should you become incapacitated or die. Here’s a little more information on each of these components of estate planning.
Estate Planning Basics
Medical conditions can leave one unable to make decisions for oneself. These can occur as end-of-life decisions after a full life lived, or they can happen due to a sudden accident, tragically. Sometimes, however, medical decisions do not mean death is imminent; it means you are unable to make decisions for yourself and the outcome—your recovery or passing—is not yet certain.
An estate plan that includes, at a minimum, a medical power-of-attorney (medical POA) identifies who is responsible for making those decisions in this situation. For those who are married, the spouse automatically has the responsibility, unless otherwise identified. For those who are single, it could be a parent.
Perhaps you’re fine with a parent making these decisions, but what if you and your partner live together unmarried? You might want your partner to make those decisions. This is why it’s important for anyone of any age to establish this step of estate planning—and the following steps as well.
The distribution of assets is a significant part of estate planning. This includes distribution of bank accounts, investment accounts, property, insurance policies, vehicles and every other asset in your possession at your passing. There are many ways this can be decided. A will is one way to identify asset distribution; a trust is another way. There can be many others depending on your specific situation.
Guardianship of Minor Children
If you are a parent, you need to declare who will be responsible for your children in the case of your untimely passing. If you don’t do it, the decision will fall to the courts to determine guardianship, which may not be done to your will.
Planning a Will
A Will is a legal document that spells out the details of how your estate is to be handled. Without a Will, your assets become subject to Intestate Laws, the state’s laws that decide where your assets go on your passing.
When planning a Will, perhaps the most important decision is who should be the executor of the estate. This will be the person who must handle the legal decision-making objectively.
Although a Will can determine asset distribution, there are other options available, such as Revocable Living Trusts, Totten Trusts and more, which can help relieve potential tax burdens on your heirs and descendants.
No aspect of estate planning is difficult to set up. Sometimes, deciding who should be executor of the estate or who should take guardianship of children poses a challenge, but beyond that an estate planner can help with the details. There are also other online resources available which can provide direction.