Most folks hear the term estate planning and think it doesn't apply to them because they're not ultra-wealthy. But according to kob.com's "Estate Planning for the Rest of Us," that's not true: everyone should have an estate plan. If you own a home or other real estate, automobiles, investments, bank accounts or life insurance, you have an estate. Estate planning is the process of planning how your assets are to be distributed after you die.
If you don't plan your estate, a judge will distribute your assets by applying the state's intestate succession laws, which may not be the same as your distribution wishes.
In addition, your estate plan should name a guardian and financial manager for minor children, state the care you want to receive if you become disabled, make business transfer arrangements, and specify how life insurance will be used for your family if you die unexpectedly—or disability insurance if you become disabled. All of this should be accomplished while minimizing taxes, court costs, and legal fees.
An estate plan should also have provisions for passing your values to your heirs, like your religious beliefs and philosophies on the importance of education and a work ethic.
First, create a last will and testament and a living will. A last will and testament says how your assets are to be distributed to your heirs when you die. A living will states how life-sustaining medical treatment decisions should be made in the event that you become incapacitated and unable to communicate them yourself.
Also, a durable power of attorney designates an individual to control your financial affairs in the event you become incapacitated. A revocable living trust is another important estate planning document because it may allow your estate to avoid probate, which can be a potentially expensive and time-consuming process. A trust will prevent the court from controlling your assets and allow for privacy of your estate. Plus, you can change the trust whenever you want.
Another benefit of estate planning is that it forces you to organize your financial records and files. You'll locate all your important documents, titles, deeds and policies and get them set in one secure place (like a fireproof safe).
If you haven't done any estate planning yet, begin the process slowly and concentrate on your last will and testament and living will first, then work on the other documents in your plan over the next year as your time and budget allow.
Have an estate planning attorney draft these estate planning documents for you.
Reference: kob.com (March 6, 2016) "Estate Planning for the Rest of Us"