Even if you are young and healthy and you don’t think your net worth is substantial, it is crucial to put in place an estate plan in the case that you pass away unexpectedly. This way, your financial legacy will be handled according to your wishes and your family members, including your spouse, parents, siblings, or any children you may have, will be taken care of in the best way possible. If you die without an estate plan, you will have no say as to how your assets are dispersed. Estate planning involves several key components: a will, designated power of attorney for both legal and medical decisions, and in some cases, a trust. In order to put together your plan, first review the laws governing estates in your home state, as these vary across the U.S.

Why Make a Will?

Laws regarding the distribution of assets following the death of someone who did not write a will vary from state to state. Generally, it depends on your situation. If you leave a spouse and children, your assets will be equally divided between your spouse and your children. When you have children, it is especially important that you draw up a will, as this is the best way to identify who you would like to serve as the guardian of your children in the event that you and/or your spouse passes away. If you are single without children, the state will distribute your assets among your blood relatives, which can also be problematic. Wills can be changed at any time, according to your needs. Once you draw up a will you should review it once a year at least, and especially when your situation changes, for instance if you divorce, get a new job, or start investing.

Creating an Estate Plan

Your assets include everything you own that is of monetary value and in some cases, emotional value. This could include a retirement savings plan; stocks, bonds, and other investments; businesses; real estate; and other objects such as family heirlooms, cars, jewelry, or antiques. The next step is to decide who you would like to inherit the assets you have listed and discuss these decisions with your family. Informing them of your decision, although it may be difficult, will help to prevent any disputes following your death. The more you own, the more complicated distributing your assets will be. Your will is also a good place to outline power of attorney, both in terms of business and/or legal decisions you would like made as well as medical decisions.

Making a Trust

Most people think that trusts are only for the extremely wealthy. However, this isn’t necessarily true.

A trust is simply a legal way of controlling when and how your assets will be dispensed to your named heirs upon your death. A trust also allows you to avoid the timely process of having your assets distributed through probate court, which is responsible for overseeing the administration of wills. Trusts may also offer more protection of your assets in the event of a lawsuit or problem with a creditor following your death.