Estate planning is the process of designating how your assets should be transferred to your beneficiaries in the event of your death or incapacitation. Think of it as preparing a care package for your loved ones. It’s your chance to ensure the wealth and assets you’ve worked so hard for throughout your life will go directly to the people you care about most when you’re no longer here or unable to manage them yourself.
Just imagine, your lifetime of work—the home where countless memories were made, the savings account that grew little by little every month, even your favorite antique brooch—all safely passed on to your children, grandchildren, or other beneficiaries you choose. That’s what estate planning is all about.
But let’s be honest, the process of creating an estate plan can be complex and sometimes confusing. Here’s everything you need to know!
A will, also known as a “last will and testament,” is a legally binding document that outlines how you want your assets distributed after your death. It serves as a guide for your loved ones and the courts to ensure your final wishes are fulfilled. Without a will, you die “intestate,” which means the state law will determine how your assets are distributed—a process that may not align with your wishes. Here’s what typically goes into a will:
A trust is a fiduciary relationship where you give a third party, the trustee, the authority to hold and manage your assets on behalf of the trust’s beneficiaries. Trusts are versatile and can be used in many ways. They can reduce estate taxes or help you control your finances, for example. There are several types of trusts you can include in your estate plan:
A Power of Attorney (POA) is a potent legal document that allows one person, known as the “principal,” to grant another person or organization, referred to as the “agent” or “attorney-in-fact,” the authority to act on their behalf in various matters. This could be due to the principal’s absence, incapacity, or simply a desire for assistance. There are several types of power of attorney, each serving different purposes and offering varying levels of power to the agent. The most common you’ll usually hear about are:
A medical directive, or advance directive, is a legal document that outlines a person’s decisions about their medical care if they become unable to make these decisions themselves. This could occur if the person becomes seriously ill or incapacitated due to an accident or illness. The purpose of having an advance directive as part of your estate plan is to ensure that healthcare professionals follow the patient’s own values and choices at a time when they cannot express their wishes. It provides clear communication to both medical staff and family members about what medical treatment the person does or does not want.
A beneficiary is any person or organization that receives money or benefits from a benefactor. In estate planning, it’s commonly used to refer to a person who will receive assets, property, or other benefits in the event of the benefactor’s death.
Elder law attorneys are lawyers who specialize in issues that affect seniors. Such a professional can help you with anything from retirement planning to long-term care prep and placement. An elder law attorney can even assist with the navigation of Medicare and Medicaid coverage. And – yes! – they do estate planning too!
Planning for the future is important at any age. But, for seniors, retirees, and family caregivers, a well-thought estate plan is essential. Why? An estate plan ensures your wishes are carried out after you pass away. Without one, your assets may not go to the people or causes you want them to. If you’ve been putting it off, now is the perfect time to get familiar with estate planning basics! Download the FREE e-book to learn about all the key parts of an estate plan, where to find more help, and a checklist to help you get better prepared for the process. Download your free e-book here.