What Is an Estate Plan?

What Is an Estate Plan
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Nobody wants to think about how their loved ones will cope when they die. However, it’s important to plan effectively to ensure a smooth transition of your wealth and worldly possessions — even if you’re young or feel like you don’t have much to leave behind.

An estate plan is a collection of legal documents that give you control over what happens to you, your assets, and any dependents you may have if you become disabled or die. The plan can include a will, power of attorney forms, trusts, and more.

KRDO’s recent article, “An estate plan is the best way to plan for the worst. Here’s how to create one,” says that having an estate plan is like carrying the umbrella for the inevitable rainy day.

A will. This is a written statement of who should get a deceased person’s assets. A will can also name who will assume guardianship of minor children—the requirements for a will to be deemed valid vary from state to state. You should consult an experienced estate planning attorney to ensure that yours is legally binding. Without a will, state intestacy laws govern who receives your assets.

Power of attorney. A healthcare power of attorney form grants permission for someone else to decide on your behalf if you cannot do so. The financial power of attorney names a person to manage your finances should you be unable to yourself.

Trusts. A trust is an agreement to hold assets for the benefit of another person. Parents create trusts to ensure their assets are correctly allocated to their children. Without a trust, the children might inherit all the money at once.

Life events — like turning 18 and going to college, getting married, changing careers, or moving states — often trigger estate planning. Pregnancy is also an excellent time to begin the process. Work with an experienced estate planning attorney to ensure your documents are legally correct. In addition to updating an estate plan after a significant life change, you should review your plan every few years.

An estate plan can take little time to draft, perhaps a week or two with an attorney, who will work with you every step of the way. Don’t put this important task off.

Reference: KRDO (Sep. 16, 2022) “An estate plan is the best way to plan for the worst. Here’s how to create one.”