Your Most Asked Questions about Estate Planning Answered

Estate planning isn’t always the most light-hearted conversation to have but it’s an important pillar of financial planning. A well-thought-out estate plan ensures that your family is protected in the event anything happens to you and that your money goes where you want it to. 

When people pass on, they generally leave behind their possessions and their loved ones. In order to help the people in your life, it’s essential to tell them what they should do with your assets and possessions when the time comes. And that’s where estate planning comes in.

Planning out your estate ensures that your wishes are honoured and those involved are treated fairly according to your direction. The alternative is to have the courts decide who gets what without your input, which can lead to future disagreements and disappointment. 

In this article, we’ll answer your most asked estate planning questions, take a closer look at what’s involved in estate planning and how you can get started to take care of your family now and after you’re gone.

Answers to your Most Common Estate Planning Questions

  1. What is an estate plan?

Simply put, an estate plan is a set of legal documents that explains how your assets will be distributed when you pass away and how you want the people in your life to handle financial decisions moving forward.

Assets that can make up an estate include houses, cars, stocks, artwork, life insurance policies and debt. You can leave your legacy behind to loved ones or donate it to a charitable cause or organization.  

Getting started with estate planning? Read our handy checklist with 10 things to consider before getting started.

  1. What documents do I need to plan my estate?

With anything legal, you’ll always need something in writing. For estate planning, there are few essential legal documents: 

  1. Your will

    A will is a standard document in most estate planning. It names the executor or personal representative to take care of and distribute your assets under your instructions. Your will includes all your assets, both financial and other value. A few exceptions include jointly owned assets or accounts, pensions or some life insurance policies that have a specific beneficiary. Depending on your situation, your will can also appoint guardians to minors in your family who will oversee and care for them until they’re adults. 

    Whether it’s a typed or written letter, your will must be signed and dated by you and two other adult witnesses that are present at the same time. Your will comes into effect after you pass away which gives instructions on how your assets will be managed, including payments to your beneficiaries. In the meantime, it’s best to store your signed documents in a safe place where your family members can access them at any point.

  2. Power of attorney

    The Power of Attorney (POA) document gives an individual that you appoint the authority to take action on behalf of yourself. It outlines who manages and makes decisions regarding your finances and medical care should you get injured or sick.

  3. Personal property memorandum

    This type of document allows you to gift personal items including jewelry, artwork, furniture and other pieces of property not mentioned in your will. This process is less formal and you can change it any time.

  4. Your living will

    Your living will is slightly different from your will. It covers your end-of-life wishes regarding medical treatment in situations where you can’t give consent yourself. This type of will often covers details like pain relief and specific health needs.

  5. Revocable trust

    A revocable trust clarifies the management of your assets while you are alive and names your beneficiaries when you pass away or become incapacitated. It’s important to note that funeral coverage and expenses can’t be covered in this type of documentation. 

Legal estate planning documents include:

  1. Is a lawyer necessary for estate planning?

If all you’re doing is writing a will, you don’t need a lawyer present. However, it’s helpful to consult an online service or lawyer to make sure you have your bases covered in your written will. If you’re in a more financially complex situation or if you want personalized advice, working with a lawyer is your best option. They can review your assets, taxes, life insurance policies and pensions and summarize it according to your direction. 

Bonus: Estate Planning 101 Webinar with Matthew Belardes, Estate Planning Attorney

  1. What role does life insurance play in estate planning?

One of the main ways to use life insurance in your estate planning is to equalize payouts to your beneficiaries. For example, you can decide to leave your investments to your spouse or partner but also want your children to receive payments. Depending on your life insurance policy, you can add more funds to ensure your assets are distributed equally across beneficiaries. 

There is no better way to set your target retirement financial goals than to speak with a financial advisor who understands your unique financial situations and can personalize your plan to your needs and wants.

  1. What happens if I die but didn’t prepare a will?

Someone who passes away without a will is called an intestate. This means your assets will be distributed according to your state legislation. Even if you shared your intentions or wishes with your loved ones, without written proof, your legacy can’t be carried out. Without a will, you can’t choose your beneficiaries, your children’s guardian or ensure that your estate will be managed correctly and in a way that minimizes taxes. This can cause disappointment and controversy with your family and the courts. It’s never too early to start thinking and preparing a will. 

  1. How often should I update my estate planning documents?

Whether you got professional advice or did it on your own, it’s important to revise your estate plans every couple years to make sure they’re up-to-date. Things in your life can change including starting a family, marriage, buying a home, illness, divorce or any other major life events.

Time to Start Planning your Estate

No matter what stage of life you’re in, it’s never too early to start estate planning. A thoughtful and comprehensive estate plan will help you feel more confident about your future and help protect your loved ones should anything happen to you. 

You can start by reviewing your assets, updating your will and legal documents every few years or whenever you go through a big life change, and consulting an estate planning professional for legal and financial advice. Meticulous planning can help minimize taxes and probate fees and ensures your family has less to worry about after you pass away.

Our wealth management specialists in San Diego can help answer any further questions you have about estate planning and offer financial advice for your family and future. 

Schedule a free consultation with our team to get started.

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