Estate Planning Facts You Cannot Ignore

Losing a loved one is often a very turbulent time in someone’s life, and it can be even more difficult when the decedent’s wishes are unclear. Estate planning aims to eliminate or at least reduce that uncertainty. Estate planning is especially important for young families, those with disabled/challenged family members, and blended families, experts emphasize. Anyone who wants a say in how their assets should be distributed after their death needs to have an estate plan.

According to a recent study, while 64% of people surveyed said having a will is very or somewhat important, only 32% reported  actually having one.

Here are important factors experts suggest you should consider:

The Foundation of Estate Planning

The first step of estate planning should involve consulting with a professional to understand available tools and their suitability. The will typically serves as the foundation of your estate plan, guiding the distribution of your assets. Without a will, your family would need to go to court and appoint an administrator to manage the estate, with distribution determined by government laws, which can vary widely.

"It gives you a voice when you no longer have one," says one expert.

Experts advise against being overly specific in the will due to uncertainties about future assets. Instead, a will generally outlines the division of the estate, often among a spouse and children, after settling debts and taxes. The will also designates an executor to carry out your wishes and names a legal guardian for any minor children.

Power of Attorney: Vital for Decision Making

Estate planning also involves preparing for potential incapacity through a power of attorney document, which allows someone else to make financial and sometimes healthcare decisions on your behalf.

"It's arguably even more important than a will," emphasizes one expert.

"Younger individuals are statistically more likely to experience a significant disability compared to premature death." Choosing a trustworthy and competent person as your attorney-in-fact is critical, as they are legally bound to act in your best interests.

Final Thoughts

Reviewing your estate plan after major life events like getting married, divorced, or having children or every few years, is recommended to ensure it reflects your current circumstances and wishes.