August is “National Make-a-Will” Month, the perfect opportunity to seriously consider your estate plan. Many delay this crucial task due to common misconceptions about what an estate involves. Here, we delve deeper into what creating an effective estate plan entails and why it’s important.

What is an “Estate,” and Why Plan for It?

An “estate” encompasses more than you might think. It isn’t just about real estate or something only the super wealthy possess. An estate includes all your assets at the time of your passing, from your house and bank account balance to even the smallest personal items.

This notwithstanding, estate planning isn’t really about the assets themselves. Rather, it’s about easing the stress on your loved ones after you’re gone. The probate process, often necessary to settle an estate, is public, costly, time-consuming—and stressful. Effective planning can simplify or even bypass this process, reducing the court’s involvement and easing the burden for everyone involved.

What is a “Will”?

A will is a legal document specifying your wishes regarding asset distribution and the care of any minor children. Contrary to popular belief, a will does not avoid probate. Instead, it streamlines the probate process by nominating a responsible executor, eliminating many statutory requirements, and ensuring your assets are distributed according to your wishes rather than the state’s default rules. For those aiming to completely avoid probate or needing tailored distributions, however—for example, for minors or beneficiaries with disabilities—a trust might be a better option.

What is a “Trust”?

A trust is not a tangible entity like a business or a bank account. Instead, it is an agreement involving the creator (trustor, grantor, or settlor), the administrator (trustee), and beneficiary. Trusts are versatile tools offering privacy and flexibility in managing your assets both during your lifetime and after. They aren’t just for the wealthy but for anyone seeking greater control over their estate after they die.

Who Will Raise Your Minor Children?

Deciding who will raise your children if you cannot is a pivotal component of any estate plan involving young children. Your will can specify a guardian, ensuring they are cared for by someone you trust—but who should that person be? When choosing a guardian, consider their age and health, their values and parenting philosophy, and their family situation. How will adding your children to their family affect its dynamics? Is their home environment stable and conducive to raising more children?

Who Will Care for Your Loved Ones with Special Needs?

When crafting a plan for dependents with special needs, it is crucial to ensure they continue receiving care without jeopardizing any government benefits. Key considerations include understanding their current and anticipated needs, the government benefits they receive, and possibly setting up a Special Needs Trust managed by a trustee familiar with these unique requirements.

When Should Your Minor Children Receive Their Inheritance?

You can set terms within a trust specifying when and how your children receive their inheritance, potentially staggering distributions over years or at milestones. This approach tailors the terms to your family’s needs and objectives, ensuring financial goals for your children are met responsibly.

How Should Your Assets Be Distributed?

Decide how to divide your assets, whether equally among heirs or based on specific needs or circumstances. Considerations include the need for flexibility to accommodate unexpected events and strategies to protect the inheritance from potential risks.

Who Will Supervise Your Assets After You Pass Away?

Choosing a reliable executor or trustee to manage your estate and ensure your wishes are honored is crucial. Questions to ask include who will manage the trust, how the assets will be funded and maintained, and what contingency plans are in place if the initial trustee can no longer serve.

Is Estate Planning All About What Happens When I Die?

Estate planning also ensures that your preferences are respected during your lifetime, especially if you become incapacitated. It involves setting up legal directives for managing your finances, making medical decisions, and protecting your assets for future care needs.

Who Will Prepare Your Estate Plan?

Given the complexity and detailed nature of estate planning—as demonstrated by the aforementioned questions—the risks of overlooking critical details with D.I.Y. options are apparent and potentially catastrophic. Engaging an experienced estate planning attorney is crucial to tailor a plan that meets your specific needs and addresses all legal aspects thoroughly.