Many people associate the topic of estate planning with palatial mansions and family heirlooms that are divided among a millionaire’s heirs, but the truth is: Everyone has an estate. If you’re young and single, you may need only a few relatively simple items, such as a will, beneficiary designations, and advance directives (e.g., medical and financial Powers of Attorney (POAs), living will, and organ donation preferences).

If you have children, you need a will to name a legal guardian. Period. If you have substantial wealth or wish to impose restrictions on your beneficiaries, you may need one or more trusts to help control how your assets are taxed, managed, and distributed. 

Simply put, you don’t have to have Rockefeller wealth to plan for what happens to your assets at your death. Proper estate planning ensures that your money and property pass to your desired beneficiaries without unnecessary complications or delays. If you don’t have a will when you pass away, the state where you lived at the time of your death will determine where your assets go, typically by lineage. Your spouse may receive your assets, or the next closest living relative (who you may or may not have chosen), though this varies by state. That’s why it’s important to plan ahead, regularly update it as your life circumstances change, and understand the legal proceedings and state involvement in your area.  

What is estate planning? 

An estate plan is a collection of documents that specify how you want your money and other assets distributed, making it easier for your loved ones to handle your affairs during a time of grief. Making decisions in advance about what happens to your personal assets ensures your plan is honoring your wishes and provides an emotional and logistical benefit to your beneficiaries. Your estate includes your financial assets (e.g., checking, savings, investment and retirement accounts, equity in your home, life insurance policies, etc.), as well as your “stuff” (e.g., furniture, collectibles, vehicles, and other personal possessions). It even includes your pets. With that in mind, here’s why you should consider an estate plan. 

Financial security for your family 

Financial security for your family is perhaps the most important objective of a well-devised estate plan. It ensures that your family has the funds it needs, there are no delays in transferring assets to them, and there is enough liquidity to pay settlement costs, taxes and debts. 

Establish a distribution timeline 

In situations involving minor beneficiaries or those with special needs or unique challenges, it is necessary to establish a reasonable distribution timeline. Trusts are usually the best mechanism for timing distributions and differ from a will in that there is no probate period. Beneficiaries may receive the assets more quickly upon your death or you may impose age or size restrictions on how and when your assets are distributed. Importantly, trusts provide more privacy than a will, which becomes a matter of public record. 

Legal guardians for young children 

No one wants to think about leaving children behind, but as hard as this task is, designating a suitable guardian for your minor children is crucial. Without it, a judge will make the decision for you with only the information at hand, without the specific knowledge you have about needs, personalities, or lifestyle. For some, the choice may be obvious – a close relative or friend, godparents, even a grandparent. But, for others, it requires careful thought and discussion with those who will be asked to raise your children and manage their inherited assets. 

Form your trusted estate council 

These are the people you will entrust with the management of your affairs during your lifetime as well as at your death. If you become incapacitated and unable to handle your financial affairs and healthcare decisions, assigning a Durable Power of Attorney (DPOA) for your finances and a Healthcare Power of Attorney (HCPOA) ensures someone with your best, and pre-directed, interests in mind will take over. 

You also need to designate an Executor responsible for carrying out the instructions in your will after your death. If you have a trust, your named Trustee will execute the provisions of your trust during your lifetime and at your death. It’s always a good idea to name at least one alternate to fill a role if your first choice is unable or unwilling to serve at any point in time. 

The importance of good estate planning 

Estate planning takes time, energy and careful thought, and setting goals and objectives is unique to each person. Hiring the right professionals to guide you through the estate planning process ensures your intended goals are carried out successfully.