What is estate planning, exactly?

Signing a legal document

Estate planning looks different for everyone because everyone’s situation is unique. The general idea, though, is to take legal action now that ensures your family is taken care of and your wishes are honored in the future.

The first step in estate planning is always to collect information and assess your current situation—not just your finances, but your health and family, too. This lets a lawyer anticipate problems and plan for your unique situation.

Depending on your situation, you will probably identify several of these goals for your estate plan:

  • Pass on your possessions to your spouse or children after you die
  • Make sure your stuff doesn’t have to go through probate (a public and sometimes lengthy process)
  • Name who will take care of your children if something happens to you and your spouse
  • Name someone to make health care decisions for you if you can’t
  • Name someone to manage your finances if you can’t
  • Make your wishes for specific health care known (for example, say when you want your family to “pull the plug”)
  • Ensure your minor or disabled children are provided for
  • Ensure your heirs don’t squander their inheritance
  • Protect your savings and retirement from unforeseen threats (such as a lawsuit)
  • Plan ahead to be eligible for Medicaid or Veterans Benefits, in case you ever need them to pay for long-term care in a nursing home
  • Ensure your money stays in your family, even after you’ve given it to your children
  • Plan for funeral expenses

You accomplish these goals by executing legal documents. Most people think of making a will when they think of estate planning, but that’s usually just one part of the picture. An estate plan may include:

  • A will;
  • A health care power of attorney;
  • A power of attorney for finances;
  • A living will;
  • A personal care plan;
  • A revocable trust; and
  • An irrevocable trust.

When you combine the concepts of financial and health care goals and legal documents, you get a good picture of estate planning. It’s a process:

  1. Assess your current finances, health, and family situation.
  2. Identify problems you’d like to avoid, financial and health care decisions you’d like to make in advance, and any other goals.
  3. Draft and execute legal documents to accomplish your goals.

One last thing. There’s a fourth step in the process: revisiting your documents and updating them from time to time, to keep them current as life and the law changes. Many people wait decades before revising their estate plans, and that can result in unintended consequences. A good estate planning lawyer will have a program or system in place to keep in touch that makes it easy to keep things up to date.

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