A basic estate plan has two major components: (1) an incapacity plan, and (2) a wealth transfer plan. The incapacity plan goes into effect if you are ever unable to manage your own affairs, due to illness or injury. The wealth transfer plan goes into effect after you pass away. It transfers your property to your loved ones.
Incapacity Plan
A well-prepared estate plan provides detailed instructions for your care and the management of your assets if you ever become incapacitated, even for a short time, due to illness or injury. If you become incapacitated without the proper documents in place, your family will have to go to the probate court for permission to manage your assets. They will also have to get court permission to make medical decisions for you, if you are unable to speak for yourself. The process is costly and time-consuming, making an already difficult situation even more stressful for your family.
Wealth Transfer Plan
No matter how large or how small your estate is, you can’t take it with you when you pass away. You probably want certain people to have the property you now own. To make sure that happens, you need to provide written instructions. Your instructions should clearly outline who should receive your property, what you want them to receive, and when they are to receive it. State laws, which take over in the absence of estate planning, often distribute assets in an undesirable way.
Estate planning is especially important for those with young children. If you have young children, you will need to name someone to care for them, and to manage their inheritance. You will probably also want to provide detailed instructions regarding their care.
It may surprise you to know that having an estate plan in place often means more to families with modest means. This is because they are less able to afford the court costs and legal fees that result from not having an estate plan in place.
If you have questions about estate planning, please contact my office.