- 2-Minute Article
Yes, You Need an Estate Plan, Even If You Don’t Have an Estate
If you have assets, you have an “estate.” And you need a plan for it. Here’s why.
You may hear “estate” and think mansions and sprawling grounds, but you don’t have to be wealthy to need an estate plan. Everyone who wants to pass on assets after his or her death should consider establishing a formal plan. This important set of legal documents provides much-needed organization at a difficult time in your family’s life.
What is an estate plan?
An estate plan is a collection of documents that protects your assets and personal property (your “estate”) and details how you want to pass them down. It documents your wishes and specifies people who will guard those wishes and act on them in your stead.
What does it include?
A will, which identifies:
- Whom you want to receive each of your assets
- Whom you want to be your children’s guardian
- An executor to oversee that process
A power of attorney, who:
- Makes financial decisions if you can't
- Pay your bills, manages investments, and makes legal or business decisions
A medical power of attorney, who:
- Will make your medical decisions if you can’t
A living will, which:
- Documents your end-of-life preferences
A trust, which:
- Controls how and when your assets are distributed
- Reduces or eliminates estate taxes
What are three critical functions of an estate plan?
- Protects your assets for your family (or other heirs)
An estate plan provides a safety net that helps preserve the value of your assets, avoids lengthy wait times for disbursement, and helps ensure the legacy you envisioned is carried out.
- Gives you a say in who receives your belongings
Through a will, you name:
- Your assets
- Your beneficiaries
- The executor, or person who will carry out your wishes after your death
- Your assets
- Allows you to choose who will make your decisions
An estate plan often contains two vital legal documents that ensure your plan will be carried out the way you want it to, including:
How to get started: