Whether you are an accountant with clients who need estate planning and a will, or you found this post while you were searching for information to help you create your own will and last testament, the following article should help you answer any questions you might have about estate planning and the importance of a will.
The Importance of Estate Planning and Having a Will
As the old saying goes, 'Nothing is certain but death and taxes." That is why it is imperative that everyone have a last will and testament at the very least. Those who are fortune enough to have amassed any wealth truly must use estate planning in conjunction with their will.
What is Estate Planning?
An estate plan is a set of documents that help you plan what happens to your money upon your death. The phrase “estate plan” sounds like a complicated set of material that only very wealthy people need, but in fact it refers to the documents that almost everyone needs, whether their financial and familial affairs are simple or complex.
All of the documents that comprise an estate plan help people avoid problems that often arise upon death. Many of these are problems that people never think about during life, or which, feeling overwhelmed by the problems, push out of their minds. However, in the absence of an estate plan, these issues will be resolved by the courts and state law. Therefore, a properly-prepared estate plan will let each person decide for himself or herself the best choices for their own families, such as who should care for their minor children, who should receive their property, which charitable organizations should receive a share of their assets, and who should wind up one’s affairs.
A major benefit to properly planning an estate is the naming of the guardian. Many people who have minor children do not think about who would take care of their kids in the event that both parents pass away. However, if such a terrible event were to occur the law requires that the court appoint someone to care for the children. A court’s decision regarding these matters can never be as good as a parent’s own choice. We have all heard stories of “wards of the state”. A Will allows a couple to make this fundamental decision themselves without interference from a judge who can never know your children and their needs as you do.
Creating a Will
A Will provides the best means to ensure that one passes their hard-earned wealth to their descendants with a minimum of cost, both emotional and fiscal. A Will appoints a guardian for one’s minor children if both parents die, it can specify how to divide up property, and it can help avoid any taxes that may be due upon death. An advanced directive and durable power of attorney effectuate many of these same goals during a person’s life. No one wants build a beautiful family only to see that family fight over their possessions when they are gone. To prevent this, you need a Will.
Estate planning also means planning for your last illness. An advanced directive on health care explains the sort of healthcare treatment that you would like to receive before your death. There is a great deal of variation in how we choose to make decisions at the end of our lives, and an advance directive on healthcare can give voice to our own preferences.
Finally, a proper estate plan includes a document that authorizes a family member or a trusted friend to care for you and oversee your finances if you are no longer able to care for yourself. A person should always have the ability to determine what type of care they receive. Without these documents, a person runs the risk of having these decisions made for him or her, and not necessarily in accordance with his or her wishes.