What Is Estate Planning And Why Is It Important?
What Is Estate Planning And Why Is It Important?
- By: Frank Makrides
- Updated on October 17, 2020
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There are two things certain in life, that is death and taxes. No one likes taxes and never mind death. Because of this, very few ever prioritize estate planning. They avoid the potential inevitable of when they’re either no longer able to make decisions on their own due to being incapacitated or they happen to pass away.
Not having a plan, sets challenges up for your loved ones, due to the lack of clear documentation and instructions on your part on how to handle things. It also takes the decision-making process out of their hands in critical life situations when you become incapacitated. In death, the government will take the maximum away from your estate as well, because you didn’t have a clear plan in place in the event of your passing.
No one wants to think about life’s challenging situations, especially when things are going well or you’re just simply busy but having an Estate Plan in place is absolutely critical for so many people. This is especially essential if you have friends, family and loved ones who depend on you.
What is Estate Planning?
Estate Planning is the plan that you put together while you’re still alive of what happens to you in the event of either becoming incapacitated or you pass on.
What is a will? What is the difference between a will and Estate Planning?
One of the most fundamental pieces of Estate Planning is the creation of your will. A will is a document that instructs the planning and distribution of your estate upon your passing. Because a will is a legal document, it must comply with the laws in your jurisdiction such that it can be properly executed with your desired intent in mind. Laws and regulations do change from time to time, so it is important that your will is also updated accordingly to reflect these changes. If done incorrectly, your will could become totally or partially invalid, completely taking away the whole point of creating the will, to begin with. This could cause complications with not only the distribution of the estate but also probate proceedings and other challenges as well. A will can be a part of your overall Estate Plan, but a will in itself shouldn’t be the only tool in place for your Estate Planning.
To learn more about wills, click the link to the USA.gov website.
What is a trust?
Another common Estate Planning tool is a trust. Simply put, the trust that you create will distribute your assets after you pass away to another person or persons. Trusts are essential for overall Estate Planning and estate tax planning purposes. If put together correctly and early, trusts can provide a clear path and direction for your assets when you pass away. This can also be a generational passing of wealth, where multiple generations could potentially receive the benefits of your estate from a trust. Trusts, like wills, are driven by laws and regulations and must be properly written to be executed and enforced. There are many different types of trusts as well. Depending on your particular Estate Planning needs, one or more trust types might be a good fit for you.
To learn more about trusts, click the link to the USA.gov website.
What is a power of attorney?
This doesn’t have to be used for Estate Planning only. Power of attorney is used in business, legal and other personal matters as a tool so that others can represent you in legal matters. This becomes very important in Estate Planning in the event that you become incapacitated and are unable to make decisions on your own, a power of attorney can represent you on your behalf to make decisions in your best interest.
To learn more about Power of attorney, click the link to the USA.gov website.
What is a durable medical power of attorney? What is a health care proxy?
A durable medical power of attorney is similar to a power of attorney but applies to medical and health care-related matters if you are unable to make decisions on your own. This is a legal document in the event you become incapacitated, then someone can make health and medical-related decisions on your behalf.
Click on the link to learn more about “How to Choose Your Healthcare Proxy” from the National Institute on Aging’s website.
When should you do Estate Planning?
No one ever thinks now is a good time to start estate planning but that simply is not the right mindset. The answer is today, right now is the best time to start your estate planning. If you have loved ones, friends and family that depend on you, or you have a substantial estate, then you need an Estate Plan in place.
What is the average cost of Estate Planning?
This typically varies by individual, how complex your estate is and who puts your plan together. I’ve seen these plans costing thousands of dollars.
Luckily, I’ve done the hard work and research for you for my own Estate Planning journey and I strongly recommend Trust&Will. They have plans starting as low as $39 at the time of this article. Their team of trusted experts provides you the tailored services you need to put together the Estate Plan that will give you and your loved ones the peace of mind you deserve. At costs this low you cannot afford to not have an Estate Plan in place.
What is the average cost of Estate Planning?
#1 Rated For Trusts & Wills
I think their name says it all. Putting together a will and most cases a trust is absolutely critical to proper estate planning. A will is something that anyone can and should at the very least put together. Trust & Will makes this process as simple and as seamless as possible. It is by far the fastest, easiest way to set up and share your estate plan.
Summary
Estate Plans don’t have to be complicated or expensive. They are essential financial planning tools and there is no reason why you can’t get one in place today. Pretty much everyone out there needs one. What are you waiting for? Go get one today, so you and your loved ones will have the peace of mind you deserve.
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Frank Makrides
Is a former financial technology industry executive, licensed realtor, real estate investor, an award-winning speaker, has been published, holds multiple patents and is passionate about all things personal finance and entrepreneurship. He is also a proud husband and father of 2 amazing children.
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