The Purpose of an Estate Plan

You may not need an estate plan. You may not be married, have children, have any assets and have no likely heirs. In such a circumstance, spending the time and money to put together an estate plan would be more or less wasted.

However, for the majority of people, one or more of those categories likely applies to your situation and your heirs would benefit from an estate plan. Notice, it is your heirs who will be the primary beneficiaries of a comprehensive estate plan, in both the literal and the figurative sense.

Certainly, there are benefits that you receive, but in most estate planning circumstances, the essential element that triggers the plan is your death. The benefits you will see is clarity and the peace of mind that goes with knowing your estate will undergo an orderly transition and that your family will not be faced with difficult, complex or confusing decisions at a time when they will be dealing with the emotional issue of your death.

Clarity

Creating an estate plan can provide a great deal of clarity. To set it up, you need to have a comprehensive view of your assets, debts and family situation. During this process, you will ascertain the value of your retirement accounts, Social Security, pensions, 401ks and any other investment vehicles you own.

You will also need to assess your debts, such as a mortgage or student loans and consider the need for additional resources for your family, should you die prematurely. Life insurance can provide the stopgap that would make up for the loss of your income earning capacity and allow your mortgage to be paid off or supply funding for education for your children. This comprehensive overview will provide the clarity that allows you to make informed decisions for your future.

Advance directives

Another key element of an estate plan is ensuring you and your spouse have the necessary documents that would allow you choose the type of medical care you desire should you be incapacitated.

Many people feel they only need such documents as an advance directive for health care or a durable power of attorney as they age, but if you suffered a brain injury in a car crash or a stroke at any age, these documents could be invaluable to your family.

A durable power of attorney is essential to allow your spouse to manage your affairs during an incapacity, saving them much stress and the additional legal hassle of having you declared incompetent at a time when they likely would have more than enough worries.

Substantial assets

If you have substantial net worth that you will be passing on, a comprehensive estate plan allows you the freedom to choose how you want the product of your working life to be distributed. Whether to children, grandchildren or charitable endeavors, doing this while you are young and not suffering any medical or mental impairments can provide a great deal of peace of mind.

Discussing this with your family can also eliminate the potential for disputes among your heirs from developing. The less clear your intentions or confused your state of affairs are at your passing, the greater the chance someone will attempt to manipulate that confusion to their advantage. And remember, if you fail to have a will, whatever the legislature of Ohio has decided intestate succession should look like is how your estate will be distributed.

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