When most people think of estate planning, they think of getting a plan in place for when they die. Of course, this is a major part of estate planning. If we don't want the courts to decide what should happen to our assets, then we need to have a last will and testament in place.
However, an effective state plan doesn't just detail who should get your assets and how those assets should be distributed when you pass away. It should protect your financial wellbeing, and other aspects of your life, while you are alive, as well.
Effective estate planning addresses issues such as:
- Naming someone to make legal and medical decisions on your behalf if you are not able to
- Determining what medical treatment you want to receive if you become very sick or injured
- Making sure at least some of your assets are not accessible to creditors
- Insurance coverage for unexpected expenses and liabilities
- Your health insurance coverage and long-term care insurance coverage, if necessary
- Assisting your family financially after you pass through life insurance
- Creating trusts that limit taxation and allow you to avoid probate
For business owners:
- Making sure your personal assets are protected from business liabilities
- Having a plan for when a business partner dies, gets divorced or leaves the business
- Business succession planning for when you retire, sell or pass on your business
As you can see, there are numerous "lifetime issues" that need to be addressed before you should start planning your last will and testament. The good news is that you don't need to think about all of these issues at once, and you shouldn't.
Your estate plan should be revisited frequently throughout your life as your needs and goals change. Another piece of good news: Effective estate planning probably costs a lot less than you think.