Estate Planning is the process of planning for your own incapacity or passing, preparing documents to outline how you (in the case of incapacity) and your family should be cared for, how your assets should be handled, and who will be entitled to handle those decisions and your assets. Most people think about Estate Planning being for people in later stages of life, but Estate Planning is important for all adults, from young individuals and couples with minor children who needs plans to provide guardianship for their children and plans for providing for the children, individuals and couples with substantial assets with investments and retirement planning, and individuals and couples at later stages in life.
Estate plans, at a minimum, should include a Last Will and Testament, Advance Medical Directive/Medical Power of Attorney, and Financial Power of Attorney. A Last Will and Testament is a document that outlines how your assets (i.e. your Estate) should be handled after your passing, and names an individual to carry out your wishes (i.e. an Executor or Personal Representative). If you pass without a Will, the laws of the state will determine who gets your assets, which may or may not be the people you wish to inherit your Estate. An Advance Medical Directive/Medical Power of Attorney is a document that states your wishes for your medical care if you become unable to make the decisions for yourself, and names an agent to carry out those wishes and make medical decisions for you that are not specifically listed in the document. A Financial Power of Attorney names an agent to manage your finances and other assets in the event you become incapacited or simply desire someone else to make those decisions for you.
More advanced estate planning can include a Trust —a Trust is set up by a Trust Agreement. The person creating the Trust is called the Grantor or Settlor. The Grantor/Settlor sets up the rules for how the Trust assets are handled and names someone called the Trustee to manage the assets in accordance with the rules of the Trust Agreement. The Trustee is charged with using the Trust assets to take care of particular individuals called Beneficiaries. Usually the Grantor/Settlor is a Beneficiary during their lifetime, and family members or other loved ones become Beneficiaries after the Grantor/Settlor's passing. Trusts are useful for individuals with substantial assets, because assets in a Trust do not have to go through the probate process with the Court. Probate can be a costly process, and requires filing your Will with the Court and making regular reports to the Court about the administration, which means your business will be public.
Trusts are also much more flexible than basic Wills, meaning the Grantor/Settlor can set up a more complicated rule structure for how assets are handled. For example, with a simple Will, assets will be given to children immediately when they reach adulthood. Often it is not a good idea to deliver substantial financial assets to an eighteen year old who is not mature enough to handle large sums of money. With a Trust, the Grantor/Settlor can set rules for when the Beneficiary can receive the assets; for example allowing the Trustee to make financial decisions to benefit the Beneficiary until they reach an older age, and then giving the assets to the Beneficiary when they are old enough to make responsible decisions.