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What is estate planning and why is it important?

Posted by Neil Thompson | Jul 05, 2022 | 0 Comments

Are you confused and stressed by the thought of estate planning? If so, you're in good company. After all, it isn't easy to think about your own mortality, and from a distance, the estate planning process can seem pretty nebulous. That's why this week on the blog we want to take a quick look at what all estate planning entails and why it's important in hopes that you'll become more familiar and comfortable with the process that awaits you.

What is estate planning?

A lot of people think that estate planning is nothing more that coming up with a way to pass your assets on to loved ones. Although that's true, estate planning can be much more intricate and broader than many people realize, touching on everything from your healthcare to your finances.

Estate planning and your assets

Let's start by looking at your assets. Without an estate plan, your assets will be distributed in accordance with state law. This is known as intestate succession. This arrangement can be dangerous because it can leave your assets in the hands of those you don't trust, or it may just leave other loved ones out of inheritance altogether.

That's why it's probably in your best interests to utilize some combination of a will and trusts to ensure that you control how your assets are distributed. And there's a trust that can help with just about every kind of need that you have.

For example, you can utilize a trust to leave assets to your loved ones for a certain period of time, with the remainder going to your favorite charity or another named beneficiary. Or you can utilize a trust to motivate a loved one to act in a certain way or limit their ability to spend down trust assets. You can also use a trust to help you qualify for Medicaid and avoid additional taxation. By speaking to an attorney who is well-versed in this area of the law, you can learn more about how to use trusts to suit your needs.

Estate planning and your decision-making

Estate planning doesn't stop with your assets. You can also use the process to create powers of attorney and healthcare directives. These documents specify who is responsible for making important medical and financial decisions for you in the event that you become incapacitated. These documents can be critically important if you want to ensure that your life plays out how you'd like it to play out later on.

Estate planning and your long-term care needs

As we mentioned above, the estate planning process can also help you prepare for your potential long-term care needs, primarily by setting you up to qualify for Medicaid. After all, if you don't engage in proper estate planning, then the bulk of your estate, or maybe even all of it, might be eaten away by long-term care costs. To maximize your ability to plan for long-term care, though, you'll need to start planning early.

Are you ready to embark on your estate planning journey?

Estate planning is the only way that you can ensure that you're protecting your assets and your loved ones as fully as possible. If you forego the process or delay it for too long, then you could be putting both at risk. Don't let that happen.

We know that the process may seem daunting, but we think that you'll feel a load lifted off your shoulders once you have a sound estate plan in place.

About the Author

Neil Thompson

Neil Thompson - The Prescription for Your Legal Problems in Minnesota


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