What Does "Estate Planning" Mean?

What Does "Estate Planning" Mean?

By Melinda Gustafson Gervasi

March 3, 2021

Mystified may be the word many people opt to describe how they feel when they hear the phrase "Estate Planning".  For many the phrase evokes images of expensive lawyers sitting behind mahogany desks  serving clients with a seven-figure net worth.  When a person cannot insert themselves into that image, they dismiss "estate planning" for the wealthy and move on to the next item on their perpetual to-do lists.  Sadly, this is not true and learning the reality of estate planning can be a rude awakening when life reels up and places you or a loved one in the Emergency Room on a random Friday morning.  Estate planning is for everyone over age 18.

Estate planning boils down to three things, planning for: illness, death and taxes.  The documents that comprise your estate plan may look very different than  the plans of America's Top 2%, but they will address illness, death, and in some cases taxes.  An estate plan is basically a process by which you take control and make decisions about who has the authority to act (either if you are alive and too sick to act or at death) and where assets will pass upon your death.  These decisions must follow the laws of your state of residence.  Common types of documents that make-up an estate plan include: will, power of attorney for finance, power of attorney for health care, and in some cases a trust (of which there are dozens of different types).

The United States is comprised of 50 different states, and each has its own set of laws related to estate planning.  Terminology, requirements and responsibilities vary across state lines. It is essential you learn about the laws of your state and how they impact your situation.  Ideally a lawyer would assist you in that process.  A blog post is not a lawyer nor does it provide legal advice.  It is meant to get you thinking and talking about important topics.

Being overwhelmed by all that goes into an estate plan, many people are tempted to leave the project for another day.  I urge you to keep moving forward.  Start by educating yourself about the basics in your state.  Caution: many of those free lectures on how to avoid probate AND get a free fish diner are nothing more than scams run by sales people who are not licensed attorneys.  My personal preference is to find an attorney focused on the area of estate planning who also emphasizes education during your work together.

Thanks for reading.  If you are up for a video, you can view a recent Estate Planning 101 seminar I gave in a virtual format at the end of 2020.  It is educational, and does not provide legal advice.