What Is Estate Planning? Do Most People Have Assets To Plan For?
Estate planning is the process of putting together a written plan for who will be in charge of your life if you become injured or incapacitated, and who will be in charge of distributing your assets after you pass away. The main part of an estate plan involves planning for incapacity, illness, or injury, which can affect anyone, regardless of whether they have money. Everyone should at the very least make some basic preparations for their potential incapacity.
What Happens If I Don’t Have An Estate Plan Or A Will In Place?
If you don’t have an estate plan or will in place, then the courts will step in and take over. If you aren’t available to sign your name and provide authorization for someone else to act on your behalf, then the government will have to make decisions for you. If you pass away without a will, then the government will have to make decisions with regard to the distribution of your assets. In some cases, even if you do have a will, a judge will end up having to determine who will receive your estate.
Why Do Most People Avoid Or Delay In Setting Up An Estate Plan?
There are many reasons why people avoid setting up estate plans. Most young people simply aren’t concerned about the possibility of incapacity or death, so they would rather put their money and time toward other pursuits. As people grow older, they oftentimes procrastinate. However, it is crucial to set up an estate plan. My daughter just turned 18, and even though she has no estate to speak of, I had her sign a durable power of attorney and an advance healthcare directive so that if need be, her mother can make life or death decisions on her behalf, access medical information, and accept or deny treatments. Since it’s a living estate plan, it will change as my daughter goes through life and gets married, has kids, and acquires assets. Despite the fact that my 18-year-old daughter has no estate, it is important for her to have a plan in place.
How Often Should I Review My Estate Plan?
You should review your estate plan every few years, and any time there is a major change in the family, such as a birth, death, marriage, divorce, inheritance, or falling out with a beneficiary.
Are There Ways To Protect Your Assets Through Estate Planning?
While it’s difficult to do it for yourself while you are alive, it’s pretty easy to protect your assets (real estate, personal property, 401(k)s, IRAs, etc.) so that your children will inherit them after you pass away. I’m a huge proponent of protecting assets for inheriting children. It’s not uncommon for an inheriting child to experience a divorce, bankruptcy, or lawsuit due to a car accident or bad business deal, and it’s important that creditors will not have access to the assets that are left behind as a legacy.
Who Are The Necessary Parties Involved In An Estate Plan?
The necessary parties involved in an estate plan are the owners of the property. Your children will not have to be involved as long as you are young, healthy, and capable of caring for yourself.
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