While out on the town with some friends the other night, somebody asked me what estate planning was for.  I thought about the question for a moment, quickly racing through what my answer should be, and realized that there are many different ways to answer that question, because the goals to be accomplished by estate planning can be varied, depending on the individual situation.

My answer was three fold.  First, estate planning allows for the orderly transfer of assets to your heirs after your lifetime. Second, estate planning allows you to protect your heirs from the potentially detrimental effects that an inheritance can have. Thirdly, estate planning can be utilized to protect assets. 

The estate planning task can also vary based on the stage of life you find yourself at. If you are at a younger stage of your life, estate planning can address issues such as guardianship for your children, and management of your childrens’ finances.  If you are at a later stage of life, estate planning can address transmission of retirement assets and protection of assets from medical expenses and, if the estate is large enough, from the estate tax. 

The typical estate plan is made up of several basic documents. They are the Last Will and Testament, the General Durable Power of Attorney for Finances, the Durable Power of Attorney for Health Care, and possibly a testamentary or inter vivos trust.  The documents to be used depend on the individual situation.

I am often asked how much an estate plan costs. My standard reply is that that is a lot like walking into a car dealership and asking the salesperson how much for a car. The answer is it depends on what you need. You can expect a truly barebones simple estate plan to run several hundred dollars, to several thousand dollars for an estate plan utilizing one or more trusts. It can seem like a significant investment, but some attorneys will give you a free consultation to discuss your situation.