Broker Check

Estate Planning – What Is It? Why Is It Important?

February 15, 2024

The term “estate planning” might call to mind something reserved for the very wealthy who are looking to avoid estate taxes. But estate planning is much more than that:  it’s also the process of designating who will receive your assets, care for any dependents in the event of your death, and who will help act on your behalf both financially and medically should you become incapacitated.

An effective estate plan documents your wishes, both financial and medical, in clear terms. Why does this need to be done? Because without an estate plan in place, the state in which you reside and the laws in place at that time will determine things like who cares for your minor children, and may result in legal battles between surviving family members for your assets.

An estate plan can contain things like:

  • A will, which names those who should receive your property
  • A trust, which can provide for some control of your property after your death
  • A living will or advanced healthcare directive, which provides guidance as to the type of medical treatment to be provided or withheld should you be incapacitated
  • A durable power of attorney for both healthcare and financial affairs, naming the individual(s) who you direct to act your behalf with respect to these matters

Registration of accounts and property, and beneficiary designations also fall into this category, as certain types of assets can pass directly to the intended individual(s) without having to go through the often-lengthy probate process.

An estate plan can also include documents outside of the legal framework. This is another key reason why estate planning is important:  you can show your family how much you love them. It’s not just that by having a plan you make your loved ones lives easier during a time of grief. Documents like letters of instructions or an Ethical Will can communicate your wishes and values/beliefs to those you most love.

Finally, it’s important to work with a good estate attorney to help you create the right documents for your situation, which are both meaningful and in line with current state law. We are happy to provide a local referral if you need one.

The information provided is not intended to be a substitute for specific individualized tax planning or legal advice. We suggest that you consult with a qualified tax or legal advisor.

LPL Financial Representatives offer access to Trust Services through The Private Trust Company N.A., an affiliate of LPL Financial.