What is an Estate Plan
Estate planning is a process that allows you to derive maximum value, control, and enjoyment from your property during your lifetime. Further, it facilitates the final distribution of that property at death to your beneficiaries when and how you think is best, while reducing or eliminating the time, costs, taxes, and complications involved.
An estate plan includes documents in which you provide instructions and direction regarding your care, if you were to become mentally or physically incapacitated. Powers of Attorney and an Advance Directive allow you to choose who should speak for you and who should care for you, if you were disabled, as well as who should be responsible for managing your finances.
Five basic steps to create an estate plan:
1. Inventory your assets. What kind of property do you own? What is the value? How is the property held--with you as the individual owner or perhaps jointly with your spouse or significant other?
2. Determine your objectives. Whom do you wish to benefit? What and how much should each beneficiary receive? When should each beneficiary receive his or her share? Do you wish to include any charities?
3. Keep the plan as simple as possible, as long as it meets your objectives. Seek legal and financial advice to review the options that are available to you and the planning methods that best accomplish those goals. Sometimes advisors can make good suggestions that you hadn't thought of.
4. Implement and execute the necessary legal instruments and paperwork. Once you have defined your plan, you need to complete the steps that will make it happen. These steps include the preparation of legal documents like wills or trusts, and perhaps pay-on-death beneficiary designations on financial, insurance, and retirement accounts.
5. You must review your estate plan from time to time. There may be changes in either the law or your life that will require revisions of your original plan.