An estate, in most definitions, means a collection of all the belongings of an individual; money, stocks, property, and any other assets. This is why estate planning has been around since humans started to comprehend the concept of property ownership and other assets. Ancient cultures treated estates differently, as they divided the estate between the tribe or the family automatically without planning in accordance with the wishes of the deceased. Ancient Rome is credited to be the originator of official estate planning procedures because of their will system; once oral and written wills were approved by public officials, estate planning as we know it today was born. As civilization progressed, estates took on different sophisticated forms, raising the importance of estate planning. To help you form a well-thought plan to prepare for the future, we hope this guide will count as a good head start.
Defining Estate Planning
Many people mistakenly use estate planning and will interchangeably, while the two terms can intersect at a few points, they are fundamentally different processes. The main point of intersection is sending a very important message to your close ones regarding the management of your properties after your death. Estate planning can include anything a will can outline, but not the other way around. Estate planning takes care of very important aspects of your estate like health management and finances on a much deeper level than a will. In Chicago, Illinois area, there’s a reputable estate planning attorney that you can consult to know everything about estate planning and how to make sure your assets are protected.
As mentioned by the professionals, an estate plan can ensure that your children will have a secure future if they’re still minors. Blended families and circumstances where both parents are deceased make it even more important to use an estate plan to provide a security blanket for minor children. While both will and estate planning needs a lawyer to be done correctly on a legal level, estate planning requires a lot more documentation and paperwork in general. You can also check here for more options as well.
Documentation Breakdown of Estate Planning
The elaboration of the necessary and additional paperwork included in estate planning can help you understand the umbrella-like comprehensiveness of an estate plan.
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Living Will
Most estate plans include a living will to consolidate a person’s wish to include pre- and post-death conditions. A will is perfect if you want to set a specific type of healthcare plan in case a time comes where you are unable to speak or think clearly. End-of-life care is most common with people who are very close to their death due to chronic and fatal diseases. It can also be used to include a living trust that can offer financial aid to your family in dire times.
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Financial Power of Attorney
Similar to a living will in principle, with the difference that a financial power of attorney takes care of your finances if you progress to a point where you are unable to do it properly. The designated person doesn’t really have to be an attorney; they can be anyone you choose. They’ll have full control over your business decisions, transactions, and other financial responsibilities. They’re often a very close family member to make sure that the financial state of the estate stays afloat.
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Beneficiary Designation
Similar to a last will or testament, beneficiary designation documents also play an important role in the management of your estate after death. It’s considered more comprehensive than last wills because it handles your finances on a more specific level. Management of retirement accounts, insurance policies, saving accounts, and more can be done easily through a beneficiary designation.
Do You Need an Estate Plan?
Creating an estate plan is sometimes inevitable if you’ve had multiple marriages, have a business, want to donate to charity after death, and other requests. Making sure that you’re leaving your assets in the right hands can at least provide you with some relief because you’ll be sure that your close ones will be able to benefit from the estate.
If there is no will or estate plan, then the distribution of your estate will be under the mercy of a probate court, which decides according to the state’s law. Also, note that the documents you include in your estate plan have to be current. If they’re outdated, it may cause a lot of issues in the future for your family. Estate plans can also be used to save money on life insurance policies since they provide significantly cheaper prices if the individual is young enough.
Many people shrug off the need for an estate plan by thinking that it’s too early to decide what to do with their estate. Note that old age isn’t the only situation where you’ll need an estate plan. The sudden and tragic disappearance of a member of the family can leave it in serious financial disarray for many years to come.