You should consider making plans for your estate as soon as you have assets you wish to protect and people or organizations you want to pass them on to. Life is full of uncertainties, and it's never too early to make preparations for the future.
One of the biggest misconceptions about estate planning is that it's only for the wealthy. However, virtually everyone has an estate, which is simply the sum total of their assets and obligations. Homes, cars, investments, savings, and personal effects are all elements of an estate. Creating an estate plan, such as a will or trust, allows you to pass these things along to other people when you die.
Elements of an Estate Plan
An estate plan involves various legal documents indicating where your assets should go and who can act on your behalf in specific circumstances. It can include elements such as a will, power of attorney, and trust.
A will determines the people who will:
- Care for your children
- Receive your assets
- Oversee the process of enforcing your estate plan
Ensure the information for your beneficiaries is accurate. If any of them has died or you want to change what you're leaving to them, you will need to update that part of your will. Any dependents should be a beneficiary on bank accounts, so they automatically receive the funds when you die. It will prevent them from spending time and money going through probate court in order to access those accounts.
You can also include a healthcare directive and appoint someone to enforce your decisions about end-of-life care and other medical needs if you should become incapacitated and can no longer care for yourself.
A power of attorney designates someone who has the authority to do the following on your behalf:
- Handle legal matters
- Manage your finances
- Manage issues related to your personal affairs
A trust is another legal instrument by which you can distribute your assets. A designated trustee manages the trust's assets on behalf of its beneficiaries — assets like life insurance policies, retirement accounts, stocks and bonds, and real estate. One of the chief benefits of a trust is that its assets will pass to its beneficiaries without going through probate, saving time and money. It also provides the trust creator with a greater level of control.
Common Reasons to Create an Estate Plan
Major life changes are a good reason to begin or update an estate plan, including:
- Purchasing a home
- Getting married
- Having a baby
- Changing careers
- Acquiring major new assets
Even if you've already created an estate plan, any of these scenarios could necessitate an update. Whether you're the head of a household or a recent college graduate, a carefully considered and up-to-date estate plan will help your loved ones in the event of your death or incapacity and prevent unnecessary conflict and heartache.
If you're thinking about creating a new estate plan or updating your current one, you should contact an attorney immediately. Someone with experience in estate law can ensure that all necessary elements are included and that the subsequent instruments are valid and enforceable. If you'd like to schedule an appointment at our College Station office to discuss your options, contact us at (979) 703-7014.