Estate Plan

What Is An Estate Plan?

An estate plan, otherwise known as estate planning, is the process of preparing duties to handle a person’s assets in the case of incapacity or death.

Deeper Definition

An estate plan also specifies how you want your affairs to be managed in the event that you are unable to do so for any reason. It is a long process, and easy to get discouraged. While there is a widespread misperception that estate planning is only about your finances, the truth is there is a lot more to it than that.

Some things that could be planned under estate planning include life insurance, real estate, cars, debts, pensions, and personal belongings, as they are all part of one’s estate. The ultimate purpose of any estate planning is set only by the estate owner’s unique intentions, and it can be as simple and as complex as the owner’s wants and needs dictate.

There are a few critical components that are strictly associated with estate planning. They are as follows: Will – a document that reveals who you want to take over assets. Trusts – a lawful arrangement that holds assets on behalf of a beneficiary, Power of Attorney – this gives one the chance to set someone aside who would help you manage your finance should you become incapacitated, Health care directives – these handle one’s medical decisions, and lastly, Beneficiary Designations – these are mostly found on retirement accounts and life insurance policies. They dictate who will receive benefits when you pass.

It should, however, be noted that estate plans must be written, signed, and authorized by the person who owns the estate.

Estate Plan Example

My grandpa happens to be a very accommodating man who ended up adopting so many children who are now grownups as he brought them up together with two of his biological children. In the bid to avoid misunderstanding and conflict among his children (biological and adopted) after he passes away, he decided to prepare an estate plan that adequately stated in it what portion of his estate should be allocated to whom.