What are the Components of an Estate Plan?

What Is the Estate Planning Process?

The estate planning process includes all the things that must be done to deal with end-of-life issues, both while a person is still alive and after they have passed away. The process can be quite involved, so it’s essential to get assistance from an experienced estate planning attorney.

The Different Parts of the Estate Planning Process

There are a number of things that you have to take care of when you’re planning your estate. You start by making an inventory of what you own and what you owe and assemble all the key documents to support that information. Next, set up a contingency plan in case something should happen to you.

Next comes the part that most people are aware of: providing for your children and other surviving family. You also need to protect your assets. And finally, make sure your wishes are clearly documented. This includes what would happen should you become incapacitated. You’ll need a living will and assign someone a power of attorney.

To take care of everything, you should hire an experienced estate planning attorney who is familiar with all these things and can help you set things up to best meet your needs and wishes.

Assemble the Information

Before you do anything else, begin by assembling all your financial information. Make a list of all your checking and savings accounts, debts, credit cards, and other assets, including your home and your cars. Don’t forget any and all retirement accounts, life insurance policies, stocks, bonds, mutual funds, health savings accounts, and any ownership interest in a business.

Once you have gathered the information, you need to get an idea of its value. At this point, you should take the paperwork to your estate planning lawyer’s office and start the actual planning process.

Hire an Estate Planning Attorney

Before you do much else, find yourself an experienced estate planning lawyer if you don’t have one already. The estate planning process is complex, and mistakes can be extremely costly, both in terms of money and in terms of not achieving your key objectives. Our team is prepared to assist you through the entire process.

Set Up a Contingency Plan

Before doing much else, set up a contingency plan. This includes designating a person who can handle your affairs in case you should become incapacitated, setting up ways to provide income for your family if you can no longer work, and paying for your care. It also includes a living will or medical directive that designates your wishes regarding medical actions to take in case you become ill or unconscious.

Provide for Your Dependents

A key component of any estate plan is providing for your dependents, particularly your children under 18. Work with your lawyer to make sure they are taken care of.

If any of your children are relying on government benefits or might have to in the future, be sure to set things up so that these benefits are not jeopardized.

Moreover, if you have children from more than one marriage or relationship, it’s especially important to set up your estate clearly so that they are all taken care of. This might not happen if you were to die without a clear will.

Protect Your Assets

There are a number of ways in which your assets can be jeopardized after your passing. They include taxes, creditors, lawsuits, and more. In each of these scenarios, someone could come after your beneficiaries’ money or assets, and they could be lost forever.

Instead of passing on your assets directly to your beneficiaries, consider shielding them in a trust or even in several trusts. That way, they will be out of reach of any attempts to grab that money away from your beneficiaries.

Talk with your estate planning attorney about whether trusts are right for your situation. Depending on the size of your estate, the answer will likely be yes.

Why You Must Protect Your Assets

Your beneficiaries could be subjected to a lawsuit in which the opposing party tries to get all their money. Or they could owe a lot of money, with similar results. In one swift action, their entire inheritance could be gone, and they could become destitute.

There are also issues with retirement fund payouts. If they were to be paid to the beneficiaries directly, they also could be in jeopardy. And what’s worse, there could be significant amounts of taxes owed, so your beneficiaries would be left with debts rather than assets.

In addition, if you leave significant amounts of money to your surviving spouse, they might remarry, and that marriage could end in divorce. You don’t want their inheritance to go to their future ex. Instead, it should go to her and her children.

Designate Fiduciaries

In addition to planning who gets what and setting up trusts as needed, you also need to appoint a fiduciary, preferably more than one. A fiduciary is someone who acts in the best interests of your estate and beneficiaries.

Their role could include being the executor of your estate, a guardian for your children, and your representative if you should become incapacitated.

How To Get Help

Estate planning is a complex process, and it will be extremely helpful to get the support of an experienced estate planning attorney. Call Nery Richardson & Konewko LLC at 773-232-6643 today to talk to our team.