No one can predict the future, but one thing is sure: If we leave unanswered questions about how to settle our affairs, life for those we love could be even more difficult. That’s why answering questions now—and formalizing them in an estate plan—is an important step that shouldn’t wait.
Who needs an estate plan? You do. Whether your estate is large or small, you should designate someone to manage your assets ( a Will and/or a Revocable Living Trust) and make health care decisions for you if you ever become unable to do so for yourself (Advanced Health Care Directive).
If you are young and single and your estate is small, you may simply focus on who will receive your assets after your death, and who should manage your estate, pay your last debts and handle the distribution of your assets.
If your estate is larger, you will need to focus on ways of preserving your assets for your beneficiaries and of reducing or postponing the amount of estate tax which otherwise might be payable after your death.
If you have children, you will want to name a guardian.
Already have an estate plan? Great! Just be sure to review your plan regularly, and make updates as things in your life change so it continues to reflect your intentions.
If you fail to plan ahead, a judge will appoint someone to handle your assets and personal care, and your assets will be distributed to your heirs according to the state’s intestate succession laws. Even if you have a Last Will and Testament, your estate, may need to go through a court supervised process known as probate.
Depending on your circumstance, creating and properly funding a Revocable Living Trust can:
- Distribute assets without the cost, time delay, and publicity of probate.
- Reduce your estate tax bill.
- Provide a way to manage your assets if you are incapacitated.
- Create your own rules for how assets are distributed.