Most people (especially those with children) know they need an estate plan, but it usually gets put on the back burner because, let’s be honest, thinking about what happens when you die isn’t the most pleasant thought.
So, what exactly is an estate plan? Why do you need one, and why do you need it now?
Estate planning isn’t just for the elderly or the wealthy. The truth is, estate planning is important for everyone. If you die without an estate plan, the court decides what happens, not you. The state’s laws will determine who gets your property and who cares for your children. Having an estate plan in place allows you to take these important decisions into your own hands.
In a nutshell, estate planning gives you the ability to make certain decisions that will set forth the game plan for when you are gone, or if you become unable to make those decisions on your own.
Putting that game plan in place requires a few documents that play very different, but equally important roles.
Estate Planning Tools
Last Will and Testament
When it comes to estate planning, the document you’ve likely heard the most about is a Last Will and Testament. Your Will is the document that, upon death, will be filed with the court to begin the probate process. In your Will, you can designate who you want your property to go to, and you can name an executor to make that happen. Most importantly for parents, it allows you to name guardians for your children, as opposed to leaving that important decision to the court.
Another common estate-planning document is a Trust. Estate planning with a Trust provides many benefits. To name a few, a properly funded Trust avoids the time and expense of the probate process that is otherwise inevitable with a Will. Avoiding probate keeps your estate out of court, which provides more privacy to your family and a more seamless transition upon your death. You can also use a Trust to control the funds and set the terms for your children’s inheritance even after you pass away. For example, you can provide for distributions to your children at specific ages, or make it contingent upon certain events (e.g. graduating from college, first job, etc.).
Durable Power of Attorney for Financial Decisions
Having a valid Power of Attorney in place is a critical component to an estate plan. A Power of Attorney allows you to designate someone you trust to make decisions on your behalf. A Durable Power of Attorney for Financial Decisions allows you to select another person to take control of your financial matters in the event you are unable to do so because of disability or incapacity.
Living Will and Health Care Power of Attorney
A Living Will (not to be confused with a Last Will and Testament) is simply a declaration setting forth your wishes regarding the medical care you want to receive in end-of-life circumstances.
In contrast to a Living Will, a Health Care Power of Attorney is a much broader document that allows you to appoint someone to make decisions regarding your health in the event you are unable to make such decisions yourself.
Having a solid estate plan in place will not only give you peace of mind, but it will also ensure an easy transition for the loved ones you leave behind.
Danielle Cornejo earned an undergraduate degree in Strategic Communications at Oklahoma State University. She knew she wanted to further her education, and after a bit of soul searching, Danielle decided to apply to law school. When Danielle’s father passed away during her first year at the University of Oklahoma School of Law, she was elected by her family to administer the estate. Left with no will or trust to guide her, Danielle relied on law school professors and mentors to help her through the emotional task of administering her father’s estate. This experience confirmed for Danielle that attending law school was the right decision. Although she encourages clients to seek her assistance in making a testamentary plan, Danielle also stands ready to help those who find themselves in situations similar to hers, when a loved one dies intestate. Danielle focuses her practice on estate planning, estate administration, tax law, business law, and real estate matters.