Estate Planning 101.

Estate planning is one of those phrases that both scare and confuse individuals. 

What does it mean exactly?

Estate planning is also a catch-all term that means taking care of your affairs in a way that your wishes can be carried out if you pass away.

Estate planning is also taking care of contingencies or what ifs in life. A big what if is what if something happens to me and I become incapacitated? Who will manage my financial affairs and help me make medical decisions in accordance with my wishes?

By putting together an estate plan, you can protect yourself and your loved ones by ensuring that your wishes are known and nominate those who can help you carry them out.

Generally, for most individuals, estate planning means having the following documents in place:

1. Will
2. Living Trust
3. Durable Power of Attorney
4. Advance Health Care Directive

Most individuals start with a Living Trust. This is where you name someone to privately manage your assets upon your death or incapacity. In your Living Trust, you state who should get what and how it should be given to your loved ones. Say, you have two kids -- teenagers. In your Living Trust, you can nominate your sister to manage the trust for your kids until they turn age 25.  If your assets such as your home are in your Living Trust, probate is usually avoided.

The Will then becomes the back-up to your Living Trust. It is a pour-over Will that can transfer assets not into your Living Trust to your Living Trust. This will require a probate proceeding in most instances, but at least your wishes will be honored.

Also, your Will is the only document where you can nominate guardians for your minor children.

A Durable Power of Attorney is where you nominate someone to manage your financial affairs while you are still living, but unable to do so.

An Advance Health Care Directive is a document where you state your choices for end-of-life wishes and nominate someone to carry out those wishes or make medical decisions for you in the event you are unable to do so.

Together, these four documents comprise of estate planning for most individuals, whether single, married or life partners.

A good estate planning attorney will explain how these documents work for you, your life and can prepare them in accordance with your wishes. A good estate planning attorney will also spot other issues or concerns involving your affairs and make suggestions for you to consider. A good estate planning attorney will, most of all, listen to you and understand all of your concerns whether it be about your family, time or money.