Understanding Estate Plans: Benefits and Importance
It is not uncommon for people to wonder: What is an estate plan and why do I need one? Let's take a look at why estate plans are an important investment.
You can also watch my video on the basics of estate plans here.
What is an Estate Plan?
An estate plan is a plan for what should happen in the event that you become unable to take care of yourself or your children due to an unforeseen emergency or death. At its core, an estate plan serves as a roadmap to address these fundamental questions:
Who will make decisions on your behalf when you are unable to?
What should happen with your children after you pass away?
Do you have a plan in place for the property and other things you own after you are gone?
This is what an estate plan is, but it’s only a technical definition of an estate plan. The definition on its own isn’t all that helpful. While it helps to know what an estate plan is, I think it is more helpful to talk about the benefits of an estate plan and why you would actually want to have one.
Benefits of an Estate Plan
There are three main reasons why people need an estate plan and what you can gain from having one in place.
- Peace of Mind: An estate plan provides you with the assurance that your family will be cared for when you can no longer do so yourself. Whether you have minor children, a business, or furry friends, your plan outlines the steps to ensure their well-being.
- Support for Your Family: In times of grief and loss, your family should be able to focus on processing their emotions without the added burden of sorting out your affairs. With an estate plan in place, they have clear instructions and information readily available.
- Life and Incapacity Planning: An estate plan doesn't just address what happens after your passing; it also safeguards your interests if you become incapacitated. Without a plan, the court may select someone to make decisions for you, but an estate plan allows you to choose someone you trust.
A Plan for Peace of Mind
The first benefit of an estate plan is that it provides you with the peace of mind that comes from knowing you have a plan in place to take care of your family when you can no longer do it yourself.
If you have minor children, you’ll know who is going to take care of them. If you have a business, your family will be able to take over or sell it and reap the benefits of your hard work. Or, maybe you don't have minor children or a business, but you have adult children or furry friends you want to take care of. Your estate plan outlines exactly what needs to happen to take care of your family–no matter how you define it.
A Plan for Your Family
The second benefit of an estate plan is that it reduces the burden that your family will have to deal with whenever they're faced with the traumatic event of your death or your incapacity.
When you lose someone that you love, you're dealing with the emotions of loss and grief. Or, you may feel helpless in the face of a loved one’s inability to care for themselves. If your family member is incapacitated, the thing you want most is to spend whatever time you can with that family member focused on love and building memories to cherish. A family member who is going through the feelings of sadness, anger, fear, or frustration should be given the gift of time to process through those emotions.
By putting an estate plan in place, all the decision-making is done–your family doesn’t have to guess about what you would do. With an estate plan, the practical stuff that needs to be taken care of has already been outlined, and your family will know what to do or who to call for help.
They’ll already know where you keep all the files and paperwork, and they can do the practical stuff without a lot of extra hassle. They'll know information about getting the death certificate. They'll know where you keep your life insurance documents.
You reduce the burden on your loved ones if you've taken the time to go through and outline a plan for what should happen. It’s the best, final gift that you can give to the people that you love – the opportunity to grieve without the additional worry of navigating the legal system.
A Plan for What to Do in Life and in Death
The third important benefit of an estate plan is that a well thought out estate plan doesn't only deal with what happens when you die, but it also covers what happens when you can no longer take care of yourself or take care of others.
The legal term for when you are not able to take care of yourself is incapacity. In a comprehensive estate plan where you've thought through the possibilities, the plan also protects you if you are incapacitated. If you are incapacitated, you cannot make decisions for yourself because you no longer have the mental or physical ability to do so. This may happen because you are in a coma or nearing the end of life, or if you develop an illness, such as Alzheimers, that prevents you from understanding and remembering.
When this happens, another person is allowed to make decisions for you. If you do not have an estate plan, the court will choose someone for you. It could be someone you know and trust, but it could also be someone who is a total stranger to you.
However, with an estate plan you get to choose who takes care of your person and your money. You can choose someone you trust rather than the court getting to decide. A well-thought out estate plan significantly reduces the chances that you will need a court-appointed guardian or conservator.
Sum It Up
An estate plan is your blueprint for the future, ensuring your wishes are carried out and your loved ones are supported during challenging times.
Don't wait! Start planning your estate today for peace of mind and security. Contact us for more information.
The Estate Planning Process
Ready to start your estate plan? Here's how to get started:
