The Importance of Estate Planning
There is a preconceived notion that you do not need to worry about having an estate plan until you are older or own a large amount of assets—this is not true.
It is never too early to develop an estate plan. An estate plan is a collection of legal documents that explains how you would like your assets distributed if you become disabled or pass away. Most estate plans will also explain how you would like certain issues, including health and financial, handled in the event you become incapable of making your own decisions.
Every estate plan is unique and consists of different documents based on what you would like. Most estate plans will include a medical power of attorney (health care proxy), a will and a financial power of attorney. A medical power of attorney appoints someone to make medical decisions on your behalf in the event you are not competent to do so yourself. A financial power of attorney is similar to a medical power of attorney except it relates only to financial decisions.
A will is a legal document that sets forth how you want your assets to be distributed. If you have minor children, a will includes guardianship appointments as well. If you pass away without a will (intestate), your estate will be distributed based on the laws of your state, and the courts will make decisions on your behalf. Having a will and estate plan ensures your assets are distributed the way you would like and makes it easier for family members.
A trust is commonly used to provide more detailed instructions on how assets should be handled. There are many types of trusts, and people commonly use them because they generally minimize estate taxes, provide for minor children or family members with special needs, and avoid probate.
Having an estate plan is incredibly important. It will ensure that your wishes are being honored and may eliminate confusion, disputes or delays during a difficult time.
Written By: Sarah Zaino, Bacon Wilson Law Clerk 2024-2025.
Reviewed and Approved by: Hyman G. Darling