Very simply, estate planning is the process of thoughtfully and legally documenting your intentions and wishes regarding:
- What assets and how you want to pass your assets on after you die.
- Who you want to pass your assets to after you die.
- Who will make decisions on your behalf if you become incapacitated physically or mentally and are unable to make decisions on your own related to your financial or medical affairs.
At a minimum, your estate planning should address your intentions and wishes with regards to
Before you die:
- If you are in a situation where you are unable to make decisions for yourself you need someone you trust to make those decisions for you. Your decisions and the person (agent) or people (agents) you assign to making decisions on your behalf need to be legally documented. This document must be in a place that is easy to find. Also, your healthcare providers will ask for copies for these documents.
- Durable Financial Power of Attorney – Selecting and authorizing a trusted agent, or agents, to make financial decisions on your behalf if you become incapacitated or are unable to handle those matters on your own.
- Living Will / Durable Medical Power of Attorney – A Living Will gives you an opportunity to express your preferences concerning medical treatment in an extreme medical situation when you cannot communicate, including at the end of you’re a Durable Medical Power of Attorney allows you to select and authorize a trusted agent, or agents, to make healthcare or medical related decisions, or act on your behalf, if you become incapacitated or are unable to handle those matters on your own.
After your death
- Legally documenting who your beneficiaries are and what assets they will receive after you pass (named beneficiaries)
Thoughtfully figure out the most efficient way to pass your assets quickly and inexpensively to your beneficiaries (i.e., straightforward, low cost to implement and maintain, quickly and tax efficiently transfer of your assets).
- Selecting a guardian for your minor children and/or dependent adult children.
- Selecting a financial guardian or custodian (also known as a guardian of the estate) to manage the assets and finances of your minor children and/or dependent adult children.
- End of life requests, including preferred funeral/burial/cremation arrangements.
Fortunately, in today’s digital age, you don’t have to start from scratch. There are plenty of online and in-person options that make preparing your estate plan much easier and cheaper than it was even a few years ago. A robust estate plan can now be prepared relatively quickly by modifying a few standard legal documents to incorporate your specific facts, circumstances, and preferences.
Before starting that process, however, it is worthwhile to understand the different ways assets can be legally transferred to your beneficiaries.