The importance of estate planning

Estate planning is one of the most popular reasons people seek legal help. But what is it really, why is it important, and when is the best time to complete an estate plan?

Estate planning is the process of designating who will receive your assets in the event of your death or incapacitation. They are typically comprised of three things:

1. A will is a legal document designating the transfer of your property and assets after you die. It's the simplest way to ensure that your funds, property, and personal effects will be distributed according to your wishes after your death. Yet many people don't have a will.

   Without a will, local courts will step in and distribute your property according to their state laws. But wills are not just for the rich or those with certain assets like real estate. A will ensures that whatever you own will be given to family members or other beneficiaries according to your wishes. It's especially important if you have children because with it you can designate who you would like to be their guardian in the event of your death. Without a will, courts will not know what your wishes are. Besides the obvious turmoil caused by a death in the family, not having a will causes uncertainty and unnecessary hardship. Family members may have to go through a long, painful, and expensive process to recover assets or establish guardianship of children.

2. A living will takes effect when you are terminally ill and unable to express your wishes about your care. It documents the type of treatment you want, but it does not let you designate someone to make decisions for you. To do that, you need a power of attorney. It identifies the person you want to make healthcare decisions if you are unconscious or unable to make them.
3. A power of attorney, also called a durable power of attorney, is either medical or financial. The financial power of attorney allows someone else to manage your assets if you are medically unable to do so, while the medical power of attorney allows someone to make medical decisions on your behalf.

As part of your will preparation, you can also set up different types of trusts, including:

• Trusts: A document designed to manage and protect your valuable assets. Common reasons to set up a trust include providing for minor children, family members, or managing personal assets should you become unable to handle them. The terms of a will are public, while trusts are private.
• Living trusts: A document used to avoid the probate process. A living trust takes effect during the life of the trustor, or the person who owns the assets. Most are revocable, meaning the trust can be changed or revoked at any time during the creator's life. However, some are irrevocable, so be sure you are creating the right kind.
• Advance directives: Legal documents that describe the type of medical treatment you want when you are unable to make decisions or communicate your wishes.

So now that you have a basic understanding of estate planning, what is the best way to work with an attorney to complete these documents?

Start by organizing what you need:

1. Outline your objectives regarding how you want to distribute your assets.
2. Inventory them and estimate your outstanding debts and prepare a list of family members who need care as well as who would be your beneficiaries.
3. Consider the holistic needs of your lifestyle and family. Some questions to ask yourself could include:
   • Do I need to provide for a child who has a disability?
   • How much money will my grandchild need for college?
   • Is it important to pass my property to my heirs in the most tax-efficient manner?
   • Do I need to establish a trust to provide for my spouse or other beneficiaries?

After you have thought about what is best for you and your family, use the information you gathered to carefully consider how you want to distribute your assets.

While you can't predict life's outcomes, you can help prepare and protect your family. Don't wait, create your estate plan today to safeguard your tomorrow.

Provided courtesy of MetLife Legal Plans.

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