What is Estate Planning?

In a legal sense, estate planning is creating a plan for how your assets (your estate) will be distributed when you die.

However, in a much broader and more important sense, estate planning is crafting a vision for the end of your life. It is knowing what you want to use your resources to do for yourself and your loved ones and then combining the right tools to make that vision happen.

[Related: What is Relational Estate Planning?]

Estate planning asks questions like:

  • Who do I want to care for with my assets when I pass?
  • What legacy do I want to leave behind?
  • How will I get my assets distributed?
  • Who will be in charge of distributing these assets?
  • What is important for me to say to my loved ones before I go?

Estate Plans Are Not One-Size-Fits-All

One thing that can make it difficult to answer “What is estate planning?” is that there is no one “right” way to do estate planning. Estate plans are individual to each person, and the legal documents you will use depend upon your situation, your loved ones, and your goals for the future.

However, as you begin to understand what you can accomplish with estate planning and what tools you can use to make those goals happen, estate planning will become clearer and clearer in your mind.

We find that most peoples’ specific goals for the end of their lives fall under five main estate planning goals, which we’ve mapped out below: 

The Five Goals of Estate Planning:

  1. Protect and Provide for Loved Ones (financially and otherwise)
  2. Avoid Conflict (between family members or friends)
  3. Leave a Legacy (for your circle of influence, no matter how large or small)
  4. Preserve Important Memories (to help your loved ones grieve and to stay present in their lives)
  5. Ease Burdens (make practical issues easy for your loved ones at your death) 

Estate Planning Tools

To accomplish these estate planning goals, you will need to combine a number of tools, some of which are legal documents and some you can create on your own. Take a look at the list below, but remember, not every tool will be necessary for every person. It all depends on what you are trying to accomplish and how simple or complex your assets are. 

Wills

A will, sometimes called a last will & testament, is the legal document that declares who will receive your property and assets and who will care for your minor children should you pass away. 

Trusts

A trust is a legal document that, like a will, can document your last wishes. Unlike a will though, it doesn’t go through the probate process and has the ability to control your assets after you die.

Beneficiary Designations

Beneficiary designations are not legal documents, rather, they are a set of instructions to your bank or other financial institution about who should receive the funds in your accounts when you pass.

Ethical Will

This is not a legally binding tool, but it is arguably the most impactful tool in any estate plan. Just as a last will and testament passes on your assets, so an ethical will passes on your values, beliefs, experiences, and advice to those you love.

[Related: Your Ethical Will: The Most Important Document in Any Estate Plan]

Estate Guide and Inventory

An estate guide and inventory is another non-legal but important tool. This document allows you to provide your personal representative or executor with a list of your assets and important instructions about your estate, including funeral arrangements and contact information for professionals who will be helpful to them after your death.

Gifts and Memories List

A gifts and memories list, sometimes called a personal property memorandum, allows you to designate personal items to go to specific people. It cannot pass on money or land, only tangible personal property.

Planned Giving

Planned giving is giving in a thoughtful and organized manner to a cause you care about either while you are living or at your time of death.

Funeral Directives

A funeral directive is a tool you can use to ensure the wishes for your funeral and burial are carried out. In it, you can choose an agent to make the right decisions at the right time.

 

So, what is estate planning? It is determining your goals for your assets and your loved ones at the end of your life, and then putting the right tools together to see those goals accomplished.

 

If you are ready to start crafting your estate plan, contact us. We will happily sit down with you at no charge to discuss what legal tools you may need.