29 Nov What Do I Need For Estate Planning?

An incredibly common question is a question you should be asking yourself. What I do need for estate planning? Do I need a will? What about a trust? What do I need and what does that have to do with probate? It can be incredibly confusing to figure out what you need and advice is all over the map.

Okay, this is actually a question I stole from Google. I just threw in “estate planning” or “what is estate planning?” and it filled this in.  Apparently, a lot of people ask that question of the old Google machine. So first of all, let’s talk about what estate planning is.

First, Understand What Estate Planning Is.

Answering what “estate planning do I need” starts by understanding what estate planning is. It’s a common phrase. It’s something we know we need to do as adults. In fact, I say every adult needs an estate plan, at every stage of life. It’s just going to look different at those different stages. We know it’s something that responsible people do. But what is it?

Estate planning is thinking through the legal to do list you would leave if you’re incapacitated, and the legal to-do list you’ll leave when you die. If you become incapacitated and when you die, you’ll leave legal issues.

What Legal Issues Come Up?

Legal issues come up if you become incapacitated. Our autonomy is something that every adult gets – our legal right to decide things for ourselves. If you’re unable to make decisions for yourself, what do people have to do to be able to help you?

The vast majority of the legal issues that come up when you die involve your assets. Where do your assets go and how do they get there? Another issue is if you have kids and if you die when those kids are little. Who should parent your kids if you can’t?

That’s what estate planning covers; the legal issues that come up if you become incapacitated and the legal issues that come up when you die.

Effective Estate Planning Takes More Than Documents, It Takes a Strategy.

So what estate planning do I need? Well, keep in mind, estate planning is not simply documents. It’s a strategy.

Now let’s talk about the assets. I own a car. When I die, where is my car supposed to go? Who’s supposed to get it? How does it get there? Is it stuck in my name? Does it get to them automatically?

If it’s stuck in your name, it’s a probate asset. Your car will have to go through some sort of legal process to get to the person it’s supposed to get to. Maybe you own it together with your spouse and it automatically goes to them because of what the car title says or maybe my strategy includes a set of rules through a trust.

But is it going to transfer correctly in the most efficient way? This is why I’m such an advocate of working with an attorney where you live, who can help strategize this with you. Because each state has different ways to do it and different ways will work better for some people than others.

Estate planning is a strategy. It’s not simply a set of documents. The right legal documents are important. The documents set up the strategy. Legal documents include things like a financial power of attorney and a health care directive, which deal with incapacity. A will says where an asset stuck in your name is supposed to go and who’s responsible for getting it there. But assets can be set up to move automatically without rules, through things like beneficiary designations. Or maybe you need rules. That’s where a trust comes in.

Importantly, you have to coordinate your assets to assets follow the plan. That’s financial organization. Financial organization sets up your plan to actually happen. That’s the difference between having an estate plan and an effective estate plan.

But what estate planning do I need? Well, the answer is that it depends and it can feel kind of overwhelming to even start. Where do you even begin?

How Do You Even Start?

I have a free quiz to help you figure out what your particular barrier is to getting started on estate planning. I’ll also give you a tool to help you overcome that barrier. Take the quiz, because every adult needs to do this. And you can do it the right way.

Are you ready to understand how estate works so you know how to avoid a mess? Take the workshop.