Estate planning isn't limited only to the wealthy

You can't think of an estate plan as something that only applies to wealthy people. Instead, you need to look at your circumstances and find out how an estate plan might benefit your needs. You need to look at the totality of the situation to determine what estate plan components you need.

One thing that you need to know from the start is that you don't need to worry about accounts that already have beneficiary designations. These include some financial accounts like bank accounts or life insurance policies. When you started the accounts, you indicated who these would go to. Look at the payable on death designation for the accounts.

For other assets, you need to look into a will or trusts. Your will can do more than just designate who gets what. It can also set up guardianship for children and provide specific care instructions. The will does have to go through probate.

Trusts do much the same as the will, but they don't have to go through the probate process. One important distinction between trusts and a will is that the trust can remain private, while a will is public record.

The estate plan can also make plans for when you can't make decisions. Your living will and power of attorney designations would come into the picture. The living will outlines your medical care preferences. The powers of attorney give a person power to make financial decisions for you and a person to make medical decisions for you.

All of these points come together to form the estate plan. In some cases, you might also need a letter of intent. This can provide important instructions for your family after you die. This might include funeral plans, but it isn't meant to be used in place of other estate planning documents because the letter of intent isn't legally binding.

Source: Northwestern Mutual, "Estate Planning 101: What's Included in an Estate Plan," Tim Stobierski, accessed May 17, 2018

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