WHAT IS ESTATE PLANNING — AND DO I REALLY NEED IT?
Estate planning is a dynamic process that involves far more than what happens to your assets (your property) after you die. By intelligently “planning your estate,” you (rather than a judge) can determine, among other things:
How, and by whom, your assets will be managed for your benefit during your lifetime if you become unable to manage them yourself;
When and under what circumstances it makes sense to distribute your assets during your lifetime;
How, and to whom, your assets will be distributed after your death;
How and by whom your personal care will be managed and how health care decisions will be made during your lifetime if you become unable to care for yourself;
Many people mistakenly think that estate planning only involves the writing of a will. That’s not true. Estate planning can, and should, involve financial, tax, medical, and business planning. Although a will is almost always part of the estate planning process, you also need other documents to fully address your estate planning needs.
There are many issues to consider in creating an estate plan.
First of all, ask yourself the following important questions:
- What are my assets and what is their approximate value?
- Whom do I want to receive those assets—and when?
- Who should manage those assets if I cannot—either during my lifetime or after my death?
- Who should be responsible for taking care of my minor children if I become unable to care for them myself?
- Who should make decisions on my behalf concerning my care and welfare if I become unable to care for myself?
Virtually every adult needs estate planning—whether the estate is large or small. First, you should always designate someone to manage your assets and make health care and personal care decisions for you if you ever become unable to do so for yourself. If your estate is small, you may simply focus on who will receive your assets after your death, and who should manage your estate, pay your last debts and handle the distribution of your assets. If your estate is large, you should consider various ways of preserving your assets for your beneficiaries and of reducing or postponing the amount of estate tax which otherwise might be payable after your death.
Whether you know it or not, you already have an estate plan. If you fail to plan ahead, a judge will simply appoint someone to handle your assets and personal care. And your assets will be distributed to your heirs according to a set of rules known as intestate distribution. And those rules may not mirror your desires as to your choice of heirs. An estate plan gives you much greater control over who will inherit your assets after your death. You should seriously consider creating your estate plan.