No one wants to imagine what would happen if they or a loved one died unexpectedly, which is why it can be so difficult to establish a good Estate Plan. However, leaving family and loved ones with little to no instruction about key choices such as who should care for your kids, where you want your money and possessions to go, and what type of medical care you want can cause chaos and economic and emotional turmoil in an already terrible situation should something happen to you.
It’s an uncomfortable topic, but a well though out estate plan is of the most meaningful gifts you can leave your loved ones.
What is an Estate Plan?
Your estate consists of everything you own - cars, homes, money in the bank, retirement or investment accounts, and prized personal possessions. An Estate Plan is a set of instructions for your loved ones about what you want to happen if you die or become unable to make decisions for yourself. This includes things like who you want to care for your children, what type of medical care you would like to receive, what type of funeral and burial arrangements you would like, and who you want your money and things to go to and how you would like it to be given to them.
To create an estate plan you’ll need to work with a lawyer who will ask questions to learn about your personal situation and help you draft the documents you’ll need. Estate Attorneys specialize in helping people create and implement these plans.
What Happens if I Die Without An Estate Plan?
If you die without a will or estate plan the government will decide what to do. Your heirs will go through the courts to decide things like who should take care of your children and how your money and property should be divided. This process can be long and emotionally and financially draining for your family and it’s likely it wont be done according to your wishes.
What’s in an Estate Plan?
When you talk with an estate attorney they will recommend what you need in your estate plan, depending on your situation. Your plan will be tailored to you and will likely contain some, though not necessarily all, of these documents:
Will - A will is what most people think about when then think estate plans. It describes things like where you want your assets to go, who you want to be in charge of distributing your estate (an executor), who you want to take care of your kids or pets.
Power of Attorney - this is the person you name who you want to take over to manage your finances and other important decisions should you no longer be able to do it yourself.
Advanced Medical Directive - these documents (such as living wills and a Healthcare Power of Attorney) specify who has the right to make healthcare decisions for you should you be unable to and lays out what kinds of medical procedures you do and do not want.
Trust - there are a variety of types of trusts used for different purposes and an attorney will be able to help you decide if you need one and what type. The general purpose of a trust is to allow you to better determine how you want your money to be given to beneficiaries.
What Do I Do With My Estate Plan?
Once you’ve worked with your lawyer to create an estate plan, you’ll want to do the following:
Talk with your loved ones about what’s in the plan. You don’t want an easily cleared up misunderstanding to create turmoil in your family once you’re gone. It’s a smart idea to sit down with your loved ones and discuss what’s in your estate plan and explain why you made the decisions before you die. Skipping this step can create lasting hard feelings and conflict for your heirs.
Make sure your loved ones know where the document is kept. It’s a good idea to keep your estate plan along with other important documents (financial statements, life insurance statements, a list of bank and social media passwords, etc.) in a secure location that at least two people will know how to access.
Talk to your Financial Advisor, Account, and other key people to make sure your assets match your plan. For instance, you want to make sure all your beneficiaries are listed according to your plan and if you’ve established a trust you want to make sure it’s appropriately listed on the documents.
Update as necessary. You’ll want to revisit your plan to make sure it still reflects your wishes, particularly when you experience major life changes. It’s also a good idea to check with your attorney from time to time to ensure laws haven’t changed in a way that impacts your estate plan.
For more detailed information about estate plans and they types of documents they contain check out Madison Blancaflor’s article, Leaving a Legacy: Why Everyone Needs an Estate Plan.
This information is not intended to be a substitute for individualized legal advice. Please consult your legal advisor regarding your specific situation.