Estate Planning 101

Dec 6, 2022 | Protecting Assets

[This article was written by Patrick Hicks, Head of Legal at at Trust & Will, the premier online estate planning and settlement platform]

Estate planning is a crucial process that involves preparing legal documents that address your wishes should you pass away or become incapacitated. Sadly, many Americans don’t get around to planning their estate before something happens, but the odds are improving. Thanks to education, access, and technology, the process of estate planning is becoming easier than ever. Keep reading to find out why estate planning is so important and why you should be participating in the process.


What is Estate Planning?

Estate planning is the process of specifying your wishes regarding the future. In the case that you pass away or become medically incapacitated, a set of legal documents ensure that your voice is heard and your wishes are honored, especially during times when your voice can’t be exercised. 

Many individuals understand that estate planning involves making it known how you’d like for your assets and property to be handled after you pass away. However, there are some lesser-known benefits to estate planning, such as naming a guardian for your children or arranging for your future medical care. 

Although estate planning has been around for centuries, it is just now becoming more commonplace. This can be attributed to several reasons. First, estate planning used to be associated as an activity reserved for the wealthy. Today, thanks to increased information and education, more and more Americans are learning that estate planning can benefit anyone, regardless of age or income level. Second, companies like Trust & Will are leveraging technology to create estate planning solutions that are more accessible and affordable. 


Why is Estate Planning Important?

Estate planning is important for everyone, regardless of their age or income level. This is because the overarching goal for planning your estate is to protect yourself and your loved ones. 

Here are some scenarios to consider that demonstrate what could happen in the absence of an estate plan.

  1. Property Distribution: The first issue is the question of what should happen to your personal property and assets when you pass away. In the absence of a Will, your estate will go through probate court. The court will use state intestacy probate laws to determine how your estate should be distributed. Although these laws typically work neatly in the case of the traditional family, the majority of American families today are non-traditional.

    These laws seldom take the complexities of modern family dynamics into account, meaning that your sentimental collection of band t-shirts could go to the completely wrong person in your family. If you want to have a say over how your property should be passed down, then you must put a Will into place. Further, you can use advanced instruments such as Trusts to provide further protection for your property and assets and avoid certain taxes and legal tie-ups.
  2. Guardianship & Conservatorship: A second issue is the appointment of guardians for your dependent children and pets. If you were to pass away or become incapacitated, who will take care of them? How will funds be arranged to cover your loved one’s expenses? Are there safeguards to ensure that their basic needs are met? Will they be placed in a loving, caring home?

    The court will usually appoint the closest kin, such as a close family member, spouse, parent, or adult child. If these members are not available, then they may appoint other family members or friends. Without an estate plan in place, you don’t get to have your say over what happens.
  3. Medical Care: Another consideration is the question of your medical care. An estate planning tool called an “Advance Directive” allows you to specify your wishes for medical care, including life-sustaining interventions. It also allows you to appoint a Power of Attorney who is authorized to access your medical records, consult your physicians, and make medical decisions on your behalf. Your Advance Directive goes into effect if you become incapacitated, such as through a severe or terminal illness, injury causing a coma, or mental health crisis. If your Advance Directive is in place, then your medical practitioners are bound by law to honor your medical wishes, even if they are potentially controversial. 

These topics and scenarios are admittedly not the most fun to think about, but are critically important nonetheless. The essence of estate planning is providing protection for yourself and your loved ones. State laws exist to determine what should happen to your property and your loved ones if you don’t have an estate plan. These laws may be fair, and they may work in some scenarios, but one size does not fit all. When it comes to something as important as your property and the livelihood of loved ones, it is best not to leave the outcomes to chance. It’s critical to exercise your rights and use your voice to express your wishes while you have the chance. 

Further, having an estate plan in place can protect the mental health of your loved ones in the case of your death or incapacitation. By having your wishes already laid out before them, your loved ones can better navigate difficult decisions knowing what you would have wanted. This can help relieve feelings of guilt, anxiety, or even in-fighting between family members when uncertainty takes hold.


How to Create Your Estate Plan in 10 Steps

Estate planning involves a good deal of planning and foresight. Keep in mind that this process is one of the most important things you’ll ever do to protect yourself and your loved ones. Just like you wouldn’t rush something as important as buying a home, estate planning requires some effort to achieve your desired outcomes. 

Luckily, companies like Trust & Will use technology to their advantage to make the process of estate planning as smooth and painless as possible. Here’s an overview of how you can create your estate plan in 12 steps:

  • Select the right plan: First and foremost, you’ll want to choose the right type of estate plan that will help you achieve your objectives. This is done by selecting which legal documents and tools you’ll use with intention. Will you be using a trust? Do you need to include a conservatorship? These are questions that are unique to each individual and thus helps shape their estate plan. You may want to consult an attorney or work with a partner like Trust & Will to determine a plan that will work best for you.
  • Take inventory: One of the first tasks to complete is to take inventory of all your personal assets, property, and belongings. Be sure to also procure any associated documentation that proves your ownership, such as property deeds, receipts, and bank statements. Addressing how your property should be distributed often makes up the foundation of your estate plan. Further, taking inventory is one of the least subjective tasks you’ll complete, thus making it a great place to start.
  • Select your beneficiaries: Next is the difficult decisions of how you want your property distributed, and to whom. This can be a little tricky when you have several loved ones, such as children who might feel snubbed if they don’t get dad’s prized record collection. Ultimately, this is your decision to make. Make sure to designate beneficiaries whenever available, such as through your retirement account company or life insurance policy holder. These types of assets that already come with beneficiary designations will pass directly to your beneficiary without having to pass through probate. When addressing any assets in your will and/or trust, make sure to describe your property or asset as clearly as possible to prevent any confusion.
  • Name your guardian: If you have any dependent children or pets, this step is tantamount to any other. Be sure to nominate your desired guardian who you trust to take good care of your loved ones in your absence.
  • Nominate your power of attorney(s): There are several types of powers of attorney (POA) who you can authorize to handle your affairs. For instance, there is a type of POA who can handle your medical decisions, another to handle your general affairs, or another who is appointed strictly for business decisions. Whatever your needs may be, it’s helpful to appoint trusted individuals who can step in and ensure smooth operations in case you become incapacitated.
  • Make your medical care decisions: Thinking about your future medical needs is no fun, but the COVID-19 pandemic served as a sobering lesson that anything can happen, and unexpectedly so. Make sure you don’t leave your loved ones with the responsibility of making heart-wrenching medical decisions, or decisions you don’t agree with, but setting up an advance directive citing your wishes regarding medical treatment.
  • Talk to your executor: Before you appoint any important role in your estate plan, such as your executor, guardian, or power of attorney, it’s a good idea to have a conversation with them. First, you’ll want to make sure they’re up to the job. Then, you’ll want to inform them of your decision-making and ensure that they’re on board. If not, you’ll want to consider alternates.
  • Create your estate plan: Once you’ve made your decisions regarding your estate plan and have made the necessary arrangements, it’s time to put your estate plan into place. You can use online platforms or work with an attorney to draw up your legal estate planning documents.
  • Get your documents witnessed and notarized: To make your plan legally-binding, you must sign your documents in the presence of witnesses, and collect your witness signatures as well. Each state has its own set of rules on the validity of estate plans, so be sure to verify that your documents are in compliance. A few states allow for electronic creation and e-signatures, while others do not. You also have the option of obtaining notarization to help speed up the probate process.
  • Store your documents securely and revise: Last but not least, be sure to store your estate plan securely. This could be in a physical location such as a safe or a safety deposit box. You can also store digital estate plans in a virtual space, such as a digital safe, when allowed by your state. Be sure to make a habit of reviewing and updating your estate plan as necessary.


Estate Planning: A Worthy Priority

Estate planning can admittedly seem daunting. It’s a centuries-old process that often required the help of expensive estate planning attorneys and wasn’t accessible or practical for members of the general public. However, times are changing and estate planning is quickly becoming a democratized process. 

As you may have learned today, there are many benefits to estate planning that can be taken advantage of by anyone, regardless of age or income status. Further, planning your estate can kickstart your family and wealth planning that can help you generate and pass down wealth for generations to come. 

Luckily, companies like Trust & Will have revolutionized the estate planning process. Today, you can create your estate plan online, with the help of educational tools, quizzes, and questionnaires. The guesswork has been eliminated so you can focus on making important decisions for you and loved ones. If you haven’t created your estate plan yet, there’s no reason to wait. 

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