What is Estate Planning?
Estate planning is the process of developing and implementing a plan for one’s personal and financial affairs. It is, in essence, the act of deciding who one wants to handle their affairs and deal with their “stuff” if or when they are unable, as well as planning tax issues. This can include periods of incapacity, as well as after death.
Who needs estate planning?
Estate planning, at some level, is appropriate for all individuals over the age of eighteen (18). The degree of planning will vary depending on a person’s individual situation.
Young Adults (18+): Once a person turns eighteen (18) years old, they must grant express permission for another person to have access to their personal and financial information. This includes making medical and financial decision on their behalf in the event of incapacity. Young adults who have been able to accumulate any degree of assets may wish to declare who should receive their property in the event of death and appointing somebody to handle the distribution of those assets.
Families with Young Children: Parents typically intend for their children to be the principal beneficiaries of their estates. During minority (up until reaching age eighteen (18)), any assets passed to children are placed under a conservatorship and held for their benefit. Estate planning in these circumstances often includes nominating guardians to physical care for the children and conservators to manage inherited assets on their behalf. Unless otherwise directed through a proper legal instrument, children take possession of any inherited assets at the age of eighteen (18). Significant considerations include financial irresponsibility and impulsivity, mental capacity, and addiction issues. Additionally, many parents wish to limit use of inherited assets for specific purposes prior to children attaining a certain age, i.e., higher education, purchase of a home, a wedding, etc.
Blended Families: This is a family unit where one or both parents have children from previous relationships. Some families blend better than others and estate planning is an excellent way to minimize stress on spouses and heirs alike. Estate planning allows partners to make their wishes and intentions clear, and to ensure that any wishes they have for the distribution of their estate to respective heirs are understood and enforced.
Retirement: Retired individuals and those planning to enter retirement generally have significant assets that require protection and management. Estate planning enables such persons to work with an expert to structure a plan that will sustain them financially during their later years. Additionally, health and capacity concerns are common. Estate planning includes appointing individuals to serve as Agents in the event of incapacity, often eliminating the need for court involvement. This can greatly reduce the time it takes to get proper care and placement arranged when necessary and keep costs to a minimum.
What is the process to set up an Estate Plan?
The process of estate planning will vary slightly from attorney to attorney, however, there are some components of the process that are universal. At the outset, the attorney will work with the client(s) to gather and organize information about the client’s assets, family, concerns, and wishes. Taking all those factors into account, the attorney will then discuss the type of estate plan that will best suit the client’s needs and accomplish their objectives. Assuming the client agrees with the attorney’s proposed plan, the attorney then drafts the documents, reviews them with the client for accuracy, then the client signs the document