Everyone’s mom has, at some point or another, given them advice that has been extremely important, whether they realized that at the time or not. Moms really do give the best guidance, and they also are really great at making sure everyone is prepared, whether it’s making school lunches, helping get homework done, getting everyone on the bus in time, or doing one of the other million things that superwoman moms do. Not only do your mom’s lessons apply during your childhood, they are also relevant when it comes to your adult life.
There’s no better way to be prepared than to have an estate plan. The consequences if you don’t one will be far worse than they would be for forgetting your homework or missing the bus. Now that you’re an adult, being prepared takes on a whole new meaning, and planning your estate is something you should take very seriously.
What is Estate Planning?
Estate planning is pretty easy to understand as a concept. It involves creating a plan for what will happen to your assets after you pass on. You can have these assets transferred to loved ones, donated, or dispersed however you want. Here are some great ways you can use estate planning to help plan in advance for you and your loved ones’ future:
- Healthcare directives. If you’re ever in the hospital and are too incapacitated to tell the doctors what you want, you’ll need to make sure that you have a plan. Otherwise, you might not receive the medical care you desire. A healthcare directive is a series of instructions from you to the doctors, nurses, and hospital on how to take care of you in the event that you’re too sick to tell them yourself.
- Power of attorney. Your power of attorney also takes care of you when you are incapacitated or unable to make decisions for yourself. How it works is simple; you pick someone you trust and they will be in charge of your financial decisions if you cannot make them. By selecting the person yourself, you ensure that you won’t be giving financial information to someone who might misuse it.
- 529 Plans. If you have a loved one that will be getting ready to go to college, you should invest in a 529 plan. This plan allows you to set aside funds for the child’s college fund. These assets will be transferred at the time of your choosing.
- Living trust. This is a three-party relationship of a fiduciary nature. You, the donor, transfer nominal title to the transferee, who is the trustee. The trustee then, on your instruction, will transfer title to the beneficiary, who is the person you want to receive your assets in the end. A living trust goes into effect immediately and allows you to avoid probate court.
These tools are just some of the many that will help you be prepared in case you pass away. Your estate, if you don’t have a plan, will end up in the grasp of probate court, which is very costly.
Probate Court Explained
Probate court is what happens when you forget your homework, so to speak. In probate court, if you’re there, it is because you forgot to make an estate plan, or you don’t have the documents in the plan that would allow you get out of it. In probate, your assets are divided up by a judge who first eliminates debts and then divides what’s left evenly. It’s unlikely that your property and debts will be divided up the way you want them to be, and your family will not be happy with the increased cost and time that probate court takes.
Mother knows best, and you can take heed of her instructions even in your adult life by being prepared and consulting an estate planning attorney.