Many people have the mistaken belief that estate planning is only for the rich and famous. All too often, the phrase "estate planning" is associated with jet-setting fashionistas with multi-million dollar mansions, chauffeured limousines, and all the so-called trappings of wealth.
You know, of course, that nothing could be further from the truth. The focus of estate planning is not about money, it's about people - the people we care about and love. That's what really matters! And, estate planning simply means taking the time to figure out how much your loved ones depend upon you for comfort, safety, an acceptable standard of living, and the attainment of certain other goals, and then taking the necessary steps to insure that those goals will be attained even though you might become incapacitated or die.
Money is important, to be sure. But, money is not the goal of estate planning, it is simply a means by which you can accomplish some - or all - of the goals you have set for your loved ones. First, however, it's important that you start by identifying your goals. When you do that, you'll quickly discover that certain goals require a sum of money and others do not. For example, insuring that your spouse will be able to maintain his or her standard of living in the event of your death is a matter of money. Making sure that your minor children are raised by the right people is not, although some consideration of the cost that might be incurred by a guardian should enter into the equation.
In the final analysis, estate planning really is that simple. And, its a logical process that you'll be able to address at your leisure, without the fear of anyone looking over your shoulder. Of course, if you're not an expert in financial analysis, or the legal aspects associated with estate planning, then obtaining the services of a professional may be appropriate and advisable. Then, when you've gotten to the point where you know what needs to be done, you'll be ready to put your plan into effect.
In this section, our goal is simply to acquaint you with some of the basic tools of estate planning, including a Last Will and Testament, a Living Trust, a Durable Power of Attorney, and Advance Medical Directives. In other sections, we'll explore each of these estate planning "tools" in greater detail. But, for now, a general overview will give you a good idea as to how these different tools can be very helpful in accomplishing your estate planning goals.
There are other "tools," as well, that can be employed when the situation warrants (for example, anirrevocable life insurance trust may be desirable if your estate is large enough to be subject to the federal estate tax; a charitable trust may be desirable if you plan to leave part or all of your estate to one or more charitable organizations; and, a limited partnership may be desirable if you want to shift some of the value of a business or real property to other family members in order to reduce potential estate taxes). But those tools - and a number of others - are designed to accomplish very specific objectives and, accordingly, are not appropriate for everyone.
For now, let's take a quick look at the basic estate planning tools named above; namely, the Last Will and Testament, the Living Trust, the Durable Power of Attorney, and the Advance Medical Directives. Then, if you'd like more detailed information about these basic tools, simply click on any of the menu items listed above or to the right.
Last Will and Testament
Historically, the work horse of all estate planning tools has been the Last Will and Testament. This, as you may know, is the document that allows you to designate the beneficiaries of your worldly possessions upon your death. It also allows you to designate the guardian or guardians of your minor children and the personal representatives of your estate.
Because a Last Will and Testament is the one document that virtually everyone should have as part of their overall estate planning, it necessarily follows that there is a huge amount of information about this estate planning document.
Accordingly, we have devoted an entire section to a detailed discussion of a Last Will and Testament, including: (1) FAQs about a Last Will and Testament; (2) Requirments for a Will; (3) Sample Wills; (4) Wills of the Rich and Famous; and (5) What the Experts Say.
In recent years, however, the revocable living trust has become a popular substitute for a Last Will and Testament, primarily because it allows your assets to pass to your designated beneficiaries without the expense and time-consuming delays of probate. While not for everyone, there is no doubt that the revocable living trust has become the cornerstone of modern estate planning.
Actually, there is a lot to a living trust, and we'll explore much of the in's and out's of living trusts - and even testamentary trusts - in our section entitled, "Revocable Living Trusts." Specifically, our Revocable Living Trust section includes such topics as "FAQs about Revocable Living Trusts," "Types of Trusts," "Selecting Trustees," "Funding a Trust | How to Fund a Living Trust," "Sample Revocable Living Trusts," and "What the Experts Say."
If you're considering a living trust as part of your estate planning, you'll want to take a look at our Revocable Living Trust section.
Durable Power of Attorney and Advance Directives
Unfortunately, estate planning in the 21st century is no longer concerned with just the prospect of dying. For many people, the threat of becoming incapacatated and not being able to attend to one's own personal and financial affairs is just as troubling. For this reason, the durable power of attorney and advance directives for health care have risen dramatically in importance in estate planning.
A power of attorney allows the person you appoint (your "attorney-in-fact") to act on your behalf. A power of attorney for financial purposes allows your attorney-in-fact to act on your behalf regarding certain financial matters that you specify in the power of attorney document. A power of attorney for medical decisions allows your attorney-in-fact to act on your behalf regarding medical treatment and medical procedures.
For more detailed information, please see our section entitled, "Powers of Attorney."
The term "advance directives" actually encompasses a number of different documents dealing with medical - as opposed to financial - issues. For example, it may include a health care proxy, a durable power of attorney for health care, a living will, a pre-designation of conservator, an anatomical gift designation, and other medical instructions. Each state will have specific laws regarding each of these documents.
For more detailed information, please see our section entitled, "Advance Directives."
So, if you're ready to explore these "tools" of estate planning in greater detail, simply click on any of the menu items listed above or to the right. When you click on any of these menu items, you'll notice that a sub-menu opens on the upper-right side of each page, giving you even more information about each of these estate planning tools.