What is Estate Planning?
Estate planning is when an individual makes important decisions regarding their death, including who will obtain their assets, children, and property. Getting these affairs in order is helpful for both the individual and their family. There are multiple elements to estate planning, including making a will and living will, identifying a power of attorney, and assigning a guardian for children and/or pets.
What is a Will?
A last will and testament is a typed legal document that identifies the beneficiaries of a deceased individual’s property or children. Property may include the individual’s money, real estate, or any valuable personal items. Having a will also minimizes estate taxes because the value of what is given away to family members or charity will reduce the value of an estate when it is time to pay estate taxes. A will is not set in stone and can be changed at any time in a person’s life.
If a person dies without having a will, this leads the state to divide the deceased’s assets. This is called an intestate death. State laws often distribute property to the deceased’s spouse and children. However, if the deceased did not have a spouse or child, the assets go to their grandchildren or parents. If they did not have grandchildren or parents, the assets go to any siblings, grandparents, aunts, or uncles. Finally, if the deceased does not have any surviving family members, the state absorbs their assets.
Having a will does more than handle the distribution of property, it also allows the ability to name an executor to wrap up an estate. The executor becomes responsible for ensuring that the individual’s written wishes are met. This can include paying off bills, canceling credit cards, and notifying banks. Additionally, having a will ensures that there are guardians and trusts for minors. Making a plan gives peace of mind and prevents family from fighting over possessions. Hiring a lawyer can help alleviate the process of figuring out how to make a will.
Living Wills
Another important aspect of estate planning is drafting a living will. A living will is a document that identifies a person’s wishes if they are unable to do so due to incapacitation. This document is important for a medical professional to look at if there is an important decision to make regarding the individual’s health, including artificial nutrition and hydration, to perform CPR, or how to handle pain in the event of an emergency.
The living will works in conjunction with an advance directive. While a living will is a single document, an advance directive can be made up of several documents that include the living will, a Do Not Resuscitate order, information about organ and tissue donation, instructions about diagnosed illnesses, and medical power of attorney. A medical power of attorney will make decisions on one’s behalf if they lose the ability to do so for themselves. They also represent the individual’s best interests, including handling financial decisions.
