For some people, generational wealth and managing the assets and responsibilities that come with that, are a normal part of life. Individuals that grow up this way may already have a firm grasp of the importance of estate planning and how important it is for them and their families.
If you are unfamiliar with estate management or the culture around it, there are a lot of myths about estate planning that cause many people to feel like it’s not an accessible practice. Estate planning can benefit anyone regardless of their assets and liabilities.
What is an estate plan?
The word “estate” can come across as a large plot of land with a huge mansion in the middle. In truth, that lifestyle is not a reality for many people in the world. An estate actually includes all the money, property, and debt that someone owns. If you have any of these things, you technically have an estate. An estate plan is a legal document that protects everything you care about that has a physical or monetary impact on your life after your death.
Estate plans can be tailored to meet the needs of you and your family. There are many components to an estate plan that can be utilized to protect you and your estate, and you have complete control over what each of those components looks like.
The Will: Outlines your last wishes and who will be responsible for carrying out those tasks. This person is known as the “executor” of your will. A will also outlines how your assets are distributed and can determine who will be the beneficiaries of your estate.
The Trust: A separate legal entity that can hold assets for beneficiaries. There are different types of trusts, but some can be utilized in the event that you are unable to care for yourself and your responsibilities. It grants rights to an individual (known as a trustee) to use your assets to care for your needs. The trustee must follow instructions exactly to avoid mismanaging your assets.
Power of Attorney & Healthcare Power of Attorney: Similar to a trust, a power of attorney is a trusted person that you designate as a decision-maker in the event that you are unable. A healthcare power of attorney can be the same person as the power of attorney, but their primary directive is to make healthcare decisions based on your wishes and best interests.
Can’t I trust my family to make these decisions for me?
Of course in an ideal world, you should be able to trust your family with anything. Generally, they know you best and have your best interests in mind. However, even if you believe you don’t have many important assets, an estate plan also removes a huge burden on your family. Making important legal choices while in mourning can be a traumatic experience, and leave room for regret if they believe that they made the wrong decision later on. If you are ever on life support, and your family is faced with whether or not to continue treatment, an estate plan can give them peace of mind in knowing that they made exactly the right choices.
Without an estate plan, you leave your family in the dark about your true wishes and a lack of direction can also create unnecessary arguments within the family. An effective estate plan doesn’t leave room for interpretation and outlines clear expectations for everyone involved. If you are ready to start the estate planning process, contact the firm of Zamora, Hillman, & Villavicencio to set up a consultation.
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