Estate planning is also known as end-of-life planning. Perhaps you may be reading this and thinking to yourself, ‘But I’m still young, why do I even need to think about this, this early on?’ Or perhaps that you’re not a millionaire with numerous assets, so estate planning isn’t as important.
Well, you’re not alone in that thought, as most people have been there, too. It’s a commonly mistaken notion to think that you need to have multiple assets or be old, to even consider organizing your estate through this process. However, the truth is that you can never go wrong with planning this early on. Mainly when young children depend on you, you’ll want to ensure that they can get what’s rightfully theirs by the time you’re gone.
Estate planning can be beneficial to all for as long as it’s done correctly and thoroughly. That said, listed below are some of the most important things that you should be aware of about estate planning:
1. Probate of Court Is Necessary
You may be unfamiliar with the term probate, like many others. It’s very legalese and technical, so it’s expected that you may have the same confusion about it, too. Well, probate simply means bringing to court. For your estate plan to be valid, first, it must have to go through court probate. Then, you’ll also learn certain specifics from your lawyer about probate, such as how a revocable trust avoids probate.
In this process, the court settles your estate (once you’ve passed on). On average, this can be a lengthy process, but it’s necessary. Most importantly, probate expenses can be pretty costly. You’ll want to prepare for this, as well, so that the heirs or beneficiaries named in your estate plan won’t have to suffer from this financial burden.
2. Last Will and Testament is One of the Most Important Documents
Here comes one of the essential documents in an estate plan: your last will and testament. If you’re still married, then it’s good to sit down with your spouse early on and thoroughly discuss this. That way, both of you are aware that this exists. Should one of you pass on ahead, then whoever is left behind can bring this will up. Of course, this is with the help of your trusted lawyer.
Your last will and testament will typically outline whatever final wishes you have regarding all of the assets you own and name those individuals you’d like to be the beneficiaries.
3. A Power of Attorney You Can Trust Is Needed
Another term you can come across when going through estate planning is the Power of Attorney (POA). It’s imperative for you to fully understand what these terms mean so that early on, you can designate the right people to fulfill that purpose. Because of the vital role this person will play in your estate planning process, it’s of paramount importance to get this right.
Typically, a (POA) can mean either of the following:
- Financial POA. This refers to the person you’ll designate as the primary person to handle financial decisions once you’re physically and mentally unable to do so. This POA will have access to your accounts so they can settle obligations and payables, such as hospital bills, for instance.
- Medical POA. This plan will contain your medical wishes, just if you become physically incapacitated to make these decisions.
4. Estate Planning Is Important
At this point, some of the most important things you should know about the estate planning process are already given. This extra proactive step you all take in protecting your assets will come a long way when the time comes that you’re no longer around to make the decisions yourself.
Most importantly, have an estate plan opens up to the following:
- It protects your beneficiaries. In most instances, your beneficiaries are your children and the spouse you’ve left behind. But, it’s essential to be very specific. Name the particular assets that go to each beneficiary. That way, the family you’ve left behind won’t fight over these belongings.
- It protects young children. If your kids are still very young, having an estate plan is one way to protect their future. Even when you’re no longer around, you’ve got that assurance that all the assets you’ve worked hard for to amass are rightfully given and distributed to them.
With all these considered, it’s essential to know that this list is by no means complete. You can learn so much more about estate planning, but these things mentioned above are merely the basics. Especially if you have no idea about estate planning in the past, then it’ll be a good reason for you to take in the services of an estate planner. This is one prudent step towards securing everything you’ve worked so hard for in your lifetime.