Estate Planning is:

Make a plan in advance and name the people you want to receive the things you own after you die.

Good estate planning is also much more than that. Proper Estate Planning also:

• Includes instructions for passing your values (religion, education, hard work, etc.) in addition to
  your valuables, on to your descendants.
• Includes instructions for your care if you become disabled before you die.
• Names a guardian and an inheritance manager for minor children.
• Provides for any of your family members with special needs, without endangering their government
  benefits.
• Provides for your loved ones who might be irresponsible (particularly young adults) with money or who
  may need protection from creditors or divorce in the future.
• Includes life insurance to provide for your family at your death, disability income insurance to
  replace your income if you cannot work due to illness or injury, and long-term care insurance to help pay
  for your care in case of an extended illness or injury.
• Provides for the transfer of your business at your retirement, disability, or death.
• Minimizes your estate’s taxes, court costs, and unnecessary legal fees.
• Is an ongoing process, not a one-time event. I want to review your plan as your family and financial
  situations, and as the law, change over your lifetime.

Estate planning is for everyone. It is not just for “retired” people, although people do tend to think about it more as they get older. Unfortunately, we can’t successfully predict how long we will live, and illness and accidents happen to people of all ages.

Estate planning is not just for “the wealthy,” either, although people who have built some wealth do often think more about how to preserve it. Good estate planning often means more to families with modest assets, because they can afford to lose the least.

A full estate plan including a living trust should cost $2,500 – $5,000. Pay any less than that and you should question the quality of the estate plan your lawyer will produce for you. Your will, powers of attorney, and health care directives are essential for everybody.

If you have kids, guardianship papers are essential.

If you own assets and property worth more than $100,000 (regardless of what you might owe on it), a living trust will save your heirs many times the cost of creating that trust, in the form of probate fees, plus it will save them months of hassle and waiting (the probate process is long and drawn out) and the public visibility of the process (who gets something from the estate is a matter of public record).

It’s never too early to start.

Take stock of all your assets. These include your investments, retirement accounts, insurance policies, real estate, business interests, and valuable items – in financial or emotional terms – such as jewelry, cars, expensive cameras, collectibles, or your mom’s silverware.
Next, decide what you want to achieve with those assets and who you want to inherit them. This is also the time to think about people you would trust to handle your business affairs and medical care in the event that you become incapacitated.
After you decide what kinds of bequests you wish to make, discuss your plans with your heirs.
The sooner and clearer you outline your intentions to your family and friends, the less chance there will be for disagreements after you’re gone.

One main difference between a will and a trust is that a will goes into effect only after you die, while a trust takes effect as soon as you create it. A will is a document that directs who will receive your property at your death and it appoints a legal representative to carry out your wishes. By contrast, a trust can be used to begin distributing property before death, at death, or afterward.

A trust is a legal arrangement through which one person (or an institution, such as a bank or law firm), called a “trustee,” holds legal title to the property for another person, called a “beneficiary.” A trust usually has two types of beneficiaries — one set that receives income from the trust during their lives and another set that receives whatever is left over after the first set of beneficiaries dies.

A will covers any property that is only in your name when you die. It does not cover property held in joint tenancy or in a trust. A trust, on the other hand, covers only property that has been transferred to the trust. In order for the property to be included in a trust, it must be put in the name of the trust.

Another difference between a will and a trust is that a will passes through probate. That means a court oversees the administration of the will and ensures the will is valid and the property gets distributed the way the deceased wanted.

A trust passes outside of probate, so a court does not need to oversee the process, which can save time and money. Unlike a will, which becomes part of the public record, a trust can remain private.

Wills and trusts each have their advantages and disadvantages. For example, a will allows you to name a guardian for children and specify funeral arrangements, while a trust does not.

On the other hand, a trust can be used to plan for disability or to provide savings on taxes.