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What is estate planning?

by Legacy Plan
April 19, 2024

Estate planning ensures that your assets are managed and distributed according to your wishes upon your death or incapacitation. Estate planning is a strategic process that typically involves a last will and testament, a revocable living trust, powers of attorney, an advance health care directive, an executor or personal representative and an estate planning attorney, and is vital for anyone looking to secure their financial legacy and provide for their loved ones. Through careful estate planning, individuals can make clear decisions about who will manage their estate, who will inherit their assets and under what conditions.

What is the definition of estate planning?

Estate planning is the process of arranging the management and distribution of a person’s estate during their lifetime and after death, while minimizing taxes and legal complications. Typically, it involves the use of legal documents like wills, trusts, powers of attorney and health care directives. These documents help ensure that an individual’s health and financial preferences are respected and that their assets are transferred smoothly to the beneficiaries.

Who benefits most from estate planning?

While it's a common misconception that estate planning is only for the wealthy, the reality is that anyone with assets to their name can benefit from this process. Here are key groups that benefit significantly:

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  • Parents with minor children. For parents, an estate plan can designate guardians for their children, ensuring they are cared for by trusted individuals if the worst should happen.

  • Property owners. Anyone who owns property, regardless of the value, can use estate planning to dictate who will inherit the property and under what conditions.

  • Older individuals. Older adults can benefit from estate planning by setting up directives concerning their health care and nominating financial and health care powers of attorney.

  • Business owners. For those who own a business, estate planning is essential to manage business succession or to detail how their interests in the business should be handled.

  • Those concerned with privacy and speed of asset transfer. Estate planning can also help avoid the probate process, which is public and can be lengthy and expensive.

What is the first step in estate planning?

The first step in effective estate planning is conducting a comprehensive inventory of your current assets and liabilities. This includes all personal property, real estate, investments, insurance policies and any other assets of value. It’s crucial to have a clear understanding of what comprises your estate to plan appropriately. Following this, it's wise to consult with a skilled estate planning attorney who can guide the process, help draft necessary documents and ensure that all legal requirements are met to make the estate plan valid.

What are the main priorities you want to address with your estate plan?

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When setting up an estate plan, there are three main priorities most individuals aim to achieve. They include:

  • Protection and management of assets. One of the primary goals is to protect assets from being diminished by taxes, legal fees and creditor claims. This involves setting up legal structures, such as trusts, that can avoid probate, maintain privacy and help protect your assets both during your lifetime and after your death.

  • Providing for loved ones. Ensuring that your loved ones are taken care of is another crucial priority. This includes not only dictating how assets are distributed and when but also planning for any family members who might need special care or financial assistance.

  • Specifying health care and financial directives. An often overlooked aspect of estate planning is setting up directives that outline your wishes regarding medical treatment if you become unable to make decisions yourself. This also includes appointing someone you trust to manage your finances and make health care decisions on your behalf.

By addressing these priorities, an estate plan can provide peace of mind, knowing that your affairs are in order, your loved ones are protected and ensure that your estate plan fully reflects your wishes and meets legal standards.

Why are regular estate plan reviews and updates important?

Estate planning is not a one-time task but an ongoing process that must adapt to changes in your life circumstances and legal standards. Regular reviews — at least once every three to five years or after significant life events such as marriage, the birth of a child or the acquisition of substantial assets — are necessary. These reviews ensure that your estate plan remains relevant and fully functional, addressing changes in your financial situation, beneficiary designations and personal preferences.

Incorporating advanced estate planning tools

For those with larger or more complex estates, advanced planning tools such as irrevocable trusts, family limited partnerships and charitable remainder trusts might be suitable. These tools can help minimize estate taxes, protect assets from creditors and facilitate the strategic passing of wealth to the next generations or charities. They require careful handling and legal expertise to set up and maintain, underscoring the importance of working with skilled professionals.

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Educational efforts for family members

Part of effective estate planning includes educating your heirs about the components of the estate plan, the reasons behind certain decisions and their roles in managing the estate in the future. This communication can prevent misunderstandings and disputes among family members and ensures a smoother transition of responsibilities when the time comes.


Estate planning is a comprehensive process that safeguards your assets, honors your wishes, and provides for your loved ones in the most efficient and harmonious way possible. It involves not only legal documentation but strategic financial management, regular updates, and clear communication with all parties involved. By understanding the essentials of estate planning and actively engaging with the right professionals, you can create a robust plan that stands the test of time, adapts to changing circumstances, and carries your legacy forward with integrity and precision. Remember, the goal of estate planning is not just to pass on what you have earned but to protect what you value and ensure its continued benefit to those you care about most.

By ensuring all these elements are in place, you can rest assured that your estate will be managed according to your precise wishes, providing peace of mind to both you and your beneficiaries.

Questions & Answers

Q: What exactly is estate planning?

A: Estate planning is the process of arranging for the management and distribution of your assets both during your lifetime and after your death. It involves creating legal documents like wills, trusts, health care directives and powers of attorney to ensure your assets are distributed according to your wishes and that decisions can be made on your behalf if you are unable to do so.

Q: Who needs to consider estate planning?

A: Everyone with assets, no matter the size or value, should consider estate planning. It is particularly important for those who have dependents, own property, wish to avoid probate and maintain privacy, or have specific wishes about their health care and financial affairs in the event they can no longer manage them themselves.

Q: What are some key components of an estate plan?

A: Key components of an estate plan typically include:

  • A will. Specifies how your assets should be distributed and who will manage the estate.
  • A trust. Can help manage your assets during your lifetime and beyond, often providing tax benefits and protecting your estate from probate.
  • Powers of attorney. Grant someone authority to handle finances, legal matters and health care decisions on your behalf.
  • Health care directive. Specifies your wishes regarding medical treatment if you become incapacitated.

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Q: What is a trust, and why might I need one?

A: A trust is a fiduciary arrangement that allows a third party, or trustee, to hold assets on behalf of a beneficiary or beneficiaries. Trusts can be used to provide legal protection for your assets, ensure those assets are distributed according to your wishes and potentially avoid probate. They can also help manage your estate and tax liabilities.

Q: How often should I update my estate plan?

A: It's advisable to review and possibly update your estate plan every three to five years or after significant life events such as marriage, divorce, the birth of a child, the death of a beneficiary or a substantial change in financial status. These reviews ensure that your estate plan aligns with your current circumstances and desires.

Q: Can estate planning reduce taxes?

A: Yes, effective estate planning can potentially reduce the taxes payable upon your death. Techniques like setting up certain types of trusts, making charitable donations and strategically gifting assets during your lifetime can help minimize estate and gift taxes.

Q: What happens if I don't have an estate plan?

A: Without an estate plan, state laws will determine how your assets are distributed, which might not align with your wishes. Additionally, your heirs may face increased legal fees, longer wait times for asset distribution and additional stress. Lack of health care directives and powers of attorney can also lead to unwanted medical treatments or legal confusion about who should make decisions on your behalf.

How do I create an estate plan?

There are numerous options and scenarios to consider when developing an estate plan that protects your legacy and achieves your objectives, and important decisions should be made with the advice of qualified lawyers and financial experts. Membership with Legacy Assurance Plan provides members with valuable resources and guidance to develop comprehensive estate plans that take life's contingencies into consideration and leave a positive impact for generations to come. Legacy Assurance Plan members also receive peace of mind that a team of trusted, experienced professionals will assist them in developing legal, financial and tax strategies that will meet their needs today and for years to come through periodic reviews.

This article is published by Legacy Assurance Plan and is intended for general informational purposes only. Some information may not apply to your situation. It does not, nor is it intended, to constitute legal advice. You should consult with an attorney regarding any specific questions about probate, living probate or other estate planning matters. Legacy Assurance Plan is an estate planning services company and is not a lawyer or law firm and is not engaged in the practice of law. For more information about this and other estate planning matters visit our website at

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