Estate planning has a reputation for being complicated, but it doesn’t have to be with the right guidance.
At The Law Offices of Brenton C. McWilliams, we believe everyone needs estate planning to thoughtfully protect their legacy. This beginner’s guide breaks down the basics of estate planning step-by-step so they make sense.
What is Estate Planning, and Why Does It Matter?
In addition to other aspects, estate planning addresses how your assets will be preserved, managed, and distributed when you pass away. This includes documenting what happens to property like your home, bank accounts, retirement funds, vehicles, and personal possessions.
Without clear plans, the state determines everything through a set of laws that provide default heirs and court appointed individuals to make incapacity decisions after appointment in probate court.
Instead of leaving crucial facets of your legacy to chance, estate planning empowers you to:
- Distribute assets as you intend based on each person’s needs rather than fixed percentages. You also decide what happens if a beneficiary passes before receiving their inheritance.
- Appoint trusted guardians for minor children in the event of your passing rather than leaving this decision to probate courts. You choose those who best match your parental values.
- Arrange care for special needs dependents, ensuring their ongoing needs and support networks are funded.
- Minimize taxes through smart trusts, asset ownership arrangements, and distribution schedules. This preserves more of your estate for your beneficiaries.
- Convey your values and priorities by specifically gifting meaningful personal possessions like heirlooms.
- Provide instructions on managing any businesses you own so operations continue smoothly.
Estate planning brings certainty for your family’s next chapter. It also gives you control and peace of mind.
Who’s Who: The Key Players in Estate Planning
Estate planning involves appointing specific people to carry out your wishes, plus working with professionals who guide document preparation to meet legal standards.
The key players typically include:
- Estate Planning Attorney – Licensed legal professional
- Will Executor – Chosen responsible party appointed in a will to administer a probate estate based on the final instructions in the will once you pass away.
- Trustee(s) – Administer trusts, distribute assets according to the instructions of the trust and oversee any trust assets for heirs who are still minors when you pass or assets that require set distribution schedules.
- Financial Power of Attorney – Granted authority to manage monetary decisions and transactions if you become incapacitated.
- Health Care Power of Attorney – Named person conveying medical wishes and treatment decisions if you cannot make them when critically ill or injured.
- Guardian(s) for Minors – Custodial caregiver for any dependent children should something unexpected happen to parents. Typically a trusted relative or close friend.
- Beneficiaries – Recipients of estate assets, individuals, and charities, outright or placed in trust if necessary or under legal age. Some serve additional roles above.
Preparing for Your Initial Estate Planning Session
First, give us a call to schedule an appointment. In our experience, many people that we meet with spend too much time worrying about what information they need to prepare for their initial estate planning meeting. We’ll tell you exactly what you need, and it’s usually not a lot.
Even if you are unsure about your goals, our attorneys excel at asking the right questions to address your needs and priorities based on your family dynamic and values.
The Foundational Estate Planning Documents
Several key documents may be used for your estate plan:
Last Will and Testament
Your will outlines the distribution of assets in probate court – those assets that don’t go to beneficiary through a nonprobate transfer. This may cover a lot of asset types depending on your plan. Assets that are important may include your bank accounts, vehicles, and some property.
Your will allows you to:
- Name an executor to administer your estate in probate court according to the distribution instructions
- Identify who inherits your assets
- Create a backup plan (usually referred to as a pour-over will) for assets that go through probate
- Incorporate provisions to make the probate process much easier and less expensive for the executor and beneficiaries
Update your will when life circumstances change, like having kids or buying property. Having a will allows you to control who is in charge, the distribution of your assets and avoid defaulting to state laws dictating strict relative inheritance percentages.
Revocable Living Trust
Living trusts are a tool used to avoid probate for assets placed inside them. People often use these private documents to outline distributing major assets like homes, investments, or businesses.
You maintain control over assets in the trust while alive. Then, at death, the assets are transferred directly to beneficiaries per your instructions, bypassing court processes.
Living trust can be used to make conditional gifts like funding college if a beneficiary graduates with honors.
When a revocable living trust is used for a plan, the trust is typically the primary document for distribution of assets. A pour over will is usually included as part of the plan, but it’s normally intended as a backup in the event there are assets that go through probate court.
Financial Power of Attorney
Through powers of attorney (POA), you authorize someone you trust to manage financial and other aspects of your life if you become incapacitated. Financial POAs grant authority to pay bills, taxes, and handle monetary decisions if you cannot do so.
They allow your agent to act in your best interest for finances and property. POAs only take effect if incapacitation occurs, whether it is temporary or long-term. POAs are only effective during your lifetime and, therefore, are not intended to be used for distribution of property after death.
Advance Health Care Directive
Like financial POAs, advance health care directives apply if you can’t make decisions for yourself. These legal forms outline your preferences for medical care. Healthcare POAs name someone you trust to interpret your written guidance if serious health complications arise.
Guardianship Designations
Parents of minor children or dependents requiring living assistance can identify and designate future guardians of their minor children or adult dependents should something happen to them. Without legal guardianship designation arrangements, courts decide the appointment of a guardian for custodianship typically based on next of kin.
But you can designate guardians aligned with your caregiving values. It’s a good idea to confirm that the individuals agree to serve as guardians. Also, name alternative guardians in case your first choices cannot fulfill the responsibility.
Additional Estate Planning Considerations
Your core estate plan establishes critical facets like asset distribution, powers over your affairs, and guardians for those depending on you.
As your estate planning advisors, we also discuss how to address other aspects of your life. Additional considerations often include:
- Retirement accounts – Naming beneficiaries on employer retirement plans and IRAs allow those funds to be directly transferred upon your passing. We also discuss the tax aspects of those accounts.
- Digital assets and accounts – Making sure the person authorized to handle the distribution of your assets has authority to access and manage your digital presence to provide clarity on closing accounts or preserving items like photos.
- Funeral and burial plans – If you feel it’s important, we provide a means for you to share your wishes for funeral or burial arrangements with your family in advance.
- Charitable estate donations – Charitable giving as part of your estate plan can both fund causes you care about while avoiding taxes.
Aligning these additional aspects with your central estate planning documents ensures harmony that translates your intentions into outcomes.
When to Update Your Estate Plan
Revisiting estate plans with significant life changes helps ensure your documents continue serving your needs and priorities.
Common triggers prompting estate plan reviews include:
- Getting married or divorced
- Buying property
- Having children or grandchildren
- Starting a business
- Children reaching adulthood
- Retirement
- Relocating to a different state
- Notable income or asset increases
Working with an Estate Planning Attorney
While estate planning conversations can feel uncomfortable to start, the process brings clarity and assurance. At The Law Offices of Brenton C. McWilliams, we help you align assets, dependent care, and wealth transfers with what matters most to you.
Our attorneys prevent costly errors and inefficient structures that could undermine your wishes later. We also help update documents after major life milestones.
Trust us to get it right from day one and evolve plans as life progresses. Contact us today to begin a conversation about your estate plans.