Important Things to Know about an Estate Plan

Important Things to Know about an Estate Plan - a basket on a black marble grave markerIf putting together your estate plan isn’t at the top of your priority list, you’re not alone. It’s something that people typically don’t want to do–for a variety of reasons. It’s not fun to think about what happens after we’re gone, and we often believe we have a lot of time to get our affairs in order.

No matter how large or small your estate is, you need a plan to ensure your wishes are carried out and your loved ones are taken care of in the way you see fit. A will is an important part of your estate plan, but your estate plan is bigger than your will.

Here’s what you need to know about having an estate plan.

It’s for everyone

The term “estate plan” may make people think that it’s only for the incredibly wealthy, but an estate plan is for anyone who wants to ensure their assets–whatever those may be–are available and accessible to their beneficiaries. Assets include bank accounts, investments, properties, vehicles, household furnishings and anything else that you own or are owed.

Beyond that, an estate plan lays out where your money should go, who should be in charge of your estate and who will take guardianship of your minor children.

Your priorities might change

Review your estate plan regularly, especially if you have a major shift in your circumstances. The will you wrote when you were 30 and newly married may no longer reflect your wishes now that you’re 55, and on your second marriage with three children, 2 step-children and a grandchild.

Perhaps you’ve purchased a second property, now have a retirement plan or have collected valuable artworks. These are all items that can change how your estate is divided. Any change in your circumstances should trigger a review of your estate plan.

This estate plan review should include who your beneficiaries are and if they’ve changed recently, how you want them to receive your assets, who you trust to make important medical or financial decisions if you become unable to, and how your bank and investment accounts are managed.

It’s not just for after your life

We associate estate planning with death, but it’s just as much about planning for disability or incapacitation. Your estate sets out who can access your money to ensure your medical needs are taken care of–and who will make important decisions on your behalf. Without an estate plan, someone in your family may have to petition the court to be allowed to make decisions for you, and you run the risk that the person granted that ability is someone you don’t trust.

If you don’t have a plan, decisions will be made for you

With an estate plan, you dictate how your assets are distributed. Without a plan, your assets are distributed according to the law where you live. Simply living with your significant other might not be enough to ensure they receive your estate in regions that don’t validate common-law marriages. In those areas, your estate goes to your biological family, not your unmarried partner, unless you have a will.

If you have a blended family, you may want your biological children to receive all of your estate or you may want it split with your current spouse and their children from a previous marriage. Without an estate plan, those wishes may not be carried out.

Final thoughts

An estate plan is a vital part of your financial planning. It sets out how you want your estate distributed, who you want to be in charge, and who can make decisions for you if you’re not able to. If you’ve been putting off your estate planning, now is a great time to get started.