The Basics of Estate Planning

According to the Cambridge Dictionary, an estate is a large stretch of land that is privately owned that often includes a great house. For some, it calls to mind countless historical dramas with sweeping gowns, carriages, and cut-glass accents. Even for those whose imaginations are prone to more modern flights of fancy, the word immediately conjures up pictures of wealth, privilege, and luxury. With that in mind, it’s no wonder that many assume estate planning is something only the extremely affluent need to worry about. However, the word “estate” also has another meaning. An estate is what a person owns when they pass away. With that in mind, everyone should understand the basics of estate planning.

The Basics of Estate Planning

Why is estate planning important? Various state and federal laws determine what happens if you are incapacitated or die. Having an estate plan in place means that you have a say about what happens. It allows you to decide who has control over decision-making. It can also ensure that matters of inheritance proceed smoothly. Basically, good estate planning protects your peace of mind while you’re living, your wishes if you’re ill or incapacitated, and also your loved ones. What do you need to know about the basics of estate planning?

What Is Estate Planning?

Estate planning can feel awkward because it inevitably involves facing the issue of mortality. But it’s also a way to protect yourself and those you care about. It involves deciding who will handle certain responsibilities and receive specific things as their inheritance. Forbes offers a simple breakdown of estate planning:

• Who: Your estate plan should make clear who can make legal, financial, and healthcare decisions for you if you are unable to do so. In addition, it should explain who you want to receive your assets.
• What: Estate planning requires thinking carefully about what each heir should receive and communicating that intention clearly.
• How: Your plan should also include how each heir will receive their intended inheritance. Smart planning can reduce the stress on your heirs during a difficult time and maximize the amount they receive.

What Are Some Key Parts of an Estate Plan?

Estate plans vary widely. The right pieces will depend on your circumstances. However, certain things are fairly common:

• Last Will and Testament: A will lists where you want your assets to go. It also names an executor. This is the person that you trust with seeing your wishes carried out.
• Durable Power of Attorney: This form names someone to take action in legal and financial matters on your behalf if you’re incapacitated. Without it, your family may be unable to take care of your matters without a court’s intervention.
• Living Will: Sometimes called a healthcare directive, this document lays out the type of care you want in specific situations. It’s incredibly useful if you’re ever unable to speak for yourself. It offers guidance, increases the odds that your wishes will be followed, and can reduce fights, guilt, and stress among your loved ones since it clarifies your wishes.
• Healthcare Power of Attorney: A healthcare power of attorney (POA) gives someone the power to make healthcare decisions for you. This can be the same person who holds your durable POA, but it doesn’t have to be.
• Beneficiary designations: Beneficiary designations aren’t specific documents. Instead, they’re found on countless documents, including life insurance, investments, and retirement benefits. Beneficiary designations are specific and generally override anything written in a will, so you’ll want to ensure they reflect your wishes. Check and update them as needed.

Is a Lawyer Necessary for Estate Planning?

A lawyer isn’t required for estate planning. However, visiting a professional who is familiar with all the ins and outs of estate planning can be helpful. They may help prevent problems by closing legal loopholes or suggesting methods to maximize the estate that you leave behind.

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At its best, estate planning is a gift. While it may feel awkward, it’s a chance to think about the people you care about and a reminder that you can take action to ease their path. At the Crossings at Riverview, we’re proud to support our residents and their families.