About 55% of Americans will die without a will or estate plan. Having an estate plan is one of the most important things you can do for your family. It’s also one of the things that many of us keep putting off because the thought of planning for the end fills us with dread. The important thing to remember is that an estate plan will help you provide for your loved ones in the event of your death or incapacity. It’s never too early to start planning.
What is an Estate Plan?
But before we go any further, what is an estate plan anyway? In a nutshell, an estate plan is a collection of legal documents that work to lay out how you would like your wealth and assets distributed after your death, and how you would like medical and financial decisions handled in the event that you’re unable to handle them yourself.
There are three basic parts to an estate plan: a last will and testament, general power of attorney, and health care power of attorney. In addition to these basic pieces, there may also be a Living or Revocable Trust, a Personal Property Memorandum, a Will, and what’s called a Living Will.
Living or Revocable Trust
A living or revocable trust holds and provides management of your assets while you’re alive and names the people to whom they will go in the event of our death. A personal property memorandum allows you to gift tangible physical property such as jewelry, artwork, etc., that isn’t covered by the will.
The specifics of this document depend on the state you live in. A will is the most standard document in estate planning. It names a personal representative to handle distributing your assets, and may also name guardians of any minor children.
The living will expresses wishes for end-of-life care rather than allowing the decisions to be left up to a proxy.
Estate Planning is Important
To put that earlier figure into perspective, up to 1,089,384 students are attending school in Arizona alone. While over half of Americans currently die without a proper will or estate plan, you don’t have to be one of them. Managing your money and other assets well in life and having a concrete plan for them after your death is one of the best ways to ensure you can still provide for your family, especially during such a difficult time.
Depending on the complexity of your estate, it may be worth bringing in legal or financial advisors to assist in the process. Sometimes there’s more to estate planning than simply having the right documents in order. Legal and financial professionals can help guide you in the process of setting up your estate plan and provide advice that is specific to your situation.
It’s also important to remember to revisit and revise your estate plan as necessary. Major changes in federal or tax law, as well as major changes in your own life such as marriage, divorce, the birth of a child, or the death of a family member, may make it necessary to alter and amend certain things throughout your plan.
In the end, estate planning is necessary to help ensure that your family is well taken care of in the event of your death and that you are well taken care of in accordance with your wishes in the event that you’re incapacitated. It may be uncomfortable to talk about the unforeseen or what’s going to happen after you’re gone, but facing it, at least in this perspective, will allow you to move forward with peace of mind, knowing that your family will be taken care of.