Importance of Estate Plans

Education about estate planning is essential because there are complex elements of creating such documents that most people don’t realize. When establishing an estate plan, you have to do more than just write down your wishes. Your attorney can review your paperwork to check that it would withstand the test in court if a dispute or other problem were to arise after you pass on. Chances are, the last thing you want is for your family to have to deal with a conflict in the midst of their grief.

Here are some answers from some of the most common questions about estate planning:

Why is writing an estate plan so important?

If you want to ensure that your loved ones receive a portion of your assets after your death, then writing an estate plan is vital. Estate planning is also about making preparations just in case you are ever mentally incapacitated. If you don’t write an estate plan, then your belongings — both tangible and intangible — may be distributed by the court based on state law. If you have certain family members that you don’t want touching your assets, then you want to protect your legacy legally through estate planning. Most people aren’t keen on the idea of having the court make decisions about the assets they’ve left behind.

What documents are within an estate plan?

In an estate plan, a person completes documents such as a Last Will and Testament, Power of Attorney, Living Will, and Advance Health Care Directive. Depending on your circumstances, writing a Revocable Living Trust may be beneficial too. Your attorney can assess your situation and recommend whether a Revocable Living Trust is in you and your family’s interest.

Once I complete the documents within an estate plan, am I done? 

Unfortunately, the work doesn’t stop there. It is not advised that a person creates one draft of an estate plan and then forgets about it. As the years go by, things may change in life. Perhaps we have children, get divorced, married, or experience an event that greatly alters our financial status. It is recommended that as things happen, you review your estate plan to see if anything must be corrected. For instance, if you get divorced and your ex is listed as the primary beneficiary (when you don’t want him or her to be), then the name will need to be removed from the estate plan. In general, reading over your estate plan on a regular basis is best.

Will taxes affect my estate?

During estate planning, an estate planning lawyer can help you understand how taxes may affect your estate and the inheritance to be distributed to beneficiaries. The four kinds of taxes that may influence your estate are gift taxes, estate taxes (including state), income taxes, and generation-skipping transfer taxes. If you have questions about taxes, it is imperative that you ask your attorney before an estate plan is finalized.