The Motley Fool Covered Estate Planning and provided the most concise explanation I have read:
What is involved in estate planning?
Estate planning entails putting a plan in place to:
- Determine what kinds of medical care you’ll receive if you can’t give consent to receive care
- Determine who should make medical decisions for you if you’re incapacitated
- Determine who should manage your money, property, and life choices in the event of incapacity
- Prepare for what will happen if you need to move to a nursing home
- Protect your assets during your lifetime and after your death
- Make sure your family is provided for if something happens and you become incapacitated or pass away
- Provide instructions for who should raise your children if something happens to you before they reach adulthood
- Ensure there is a plan in place to care for your pets after you’ve passed on
- Facilitate the timely transfer of assets to loved ones
- Determine who will inherit your money and property
- Reduce the costs associated with the transfer of your assets after your death, including probate fees and estate taxes, if applicable
- Ensure any business you own can continue to operate after you’ve passed it on to the next generation
- Address any special needs of your loved ones who will inherit, such as making sure that a disabled relative does not lose access to Medicaid — or other benefits intended only for people with financial need — due to receiving an inheritance
They correctly recount what happens if you don’t have an Estate Plan:
If you don’t make an estate plan:
- Intestacy laws could determine who inherits your money or property instead of you determining who receives your assets.
- If a court declares you too incompetent to make decisions on your own, the court may have to appoint a guardian to make your decisions and manage assets for you.
- If the court declares you’re too incompetent to make decisions on your own, you could end up getting medical care you don’t want or not getting medical care you’d prefer.
- You could force your loved ones to make life-and-death decisions.
- The court could be forced to decide who gets custody of your children or what happens to your pets after you pass on.
- Your assets will have to pass through the probate process.
- An inheritance may not be structured the right way.
- You could end up owing estate tax.
- You and your heirs could lose assets due to high medical costs.
- Your business might be unable to continue operations.
- Your family may be left unsupported.
I agree so much with this recommendation from the Fool:
Depending upon your specific situation, there may be other steps involved in the estate planning process as well. Because your plan should be personalized to you, you should work with an attorney who can discuss your goals, your financial situation, and your family situation and assist with the creation of a personalized plan.