Estate planning is a formal term for the process of preparing for and managing the financial and administrative transitions related to your death. Hopefully, it softens the impact of your death on those you leave behind by clearly documenting your wishes regarding administration of your estate, identifying your assets, providing instructions as to the distribution of the assets upon your death, and naming the person or persons responsible for managing the distribution of the assets. While the most obvious facet of estate planning deals with who gets what after you are gone, there is much more to it, as you will learn.
Estate planning seeks to protect assets against the claims of unintended recipients in order to preserve them for your chosen beneficiaries. It may be a wealthy sibling that doesn't need any more wealth, or a "close" relation that isn't close at all, or the IRS looking for more tax revenues, or your creditors who may seek to lay claim to some of your assets when you are gone. Careful estate planning can prevent such claims.
Estate planning provides for those you leave behind upon your death. Although financial matters and asset distributions tend to be the primary focus, there is so much more for you to consider. Estate planning can assure continuing support and care for those you leave behind. Whether you are concerned about leaving an aging spouse, a developmentally disabled dependent, a minor child, or a cherished pet, estate planning can be used to create solutions that help protect those who survive you.
Estate planning also can be used to document your instructions for the myriad details associated with your death. Do you want burial or cremation? Do you want a funeral or a memorial service? Do you have special desires regarding your burial site? Your funeral home? Your casket? Location of burial site? If you consider these details, not only can you document your desires, but you can make provision to cover the costs that are certain to be incurred. These are just a few of the details that can be addressed during the estate planning process.
Finally, estate planning involves coming to grips with your own mortality; with the inevitability of your own death. It represents a recognition and acceptance of the reality that life on earth comes to an end. And it recognizes that, with a little forethought, the grief and stress on those left behind can be eased during what is sure to be a chaotic time of transition for them.
Estate planning is important, and if you have already pursued investment planning, insurance planning, or retirement planning, it will be just a slight stretch for you to extend your efforts to estate planning. After all, planning for wealth during your lifetime and planning for its distribution upon your death really go hand in hand.
You may want to look at some of the following materials to help you with your estate planning: