This post contains opinion of Misook Yu . Consult a legal advisor for specifics of estate planning.

Estate planning is a process of planning to transfer one’s assets to others in a cost-effective manner. It’s important to understand that giving your money/asset may trigger different taxations such as gift tax and estate tax, possibly leaving only a fractional amount to the recipient, if not carefully planned in advance. Fortunately, the government allows exemptions of such taxes up to $5.43 million (2015) per person and twice that for married couples. Though these exclusion amounts may change in the future, unless you and your spouse own substantial wealth, it’s not likely that you will need to worry about estate taxes.
But probate, the state-handled process of transferring ownership of assets, can be lengthy (3~6 months or longer) and costly (3~7% or more of total probate assets). That can also leave room for a fight between surviving family members. So regardless of the amount of assets, a good estate plan can avoid probate while saving money, time, and often headaches for your loved ones. Basic elements of estate planning include, but are not limited to:

• Will: You can state what assets you want to give to whom. But remember, a will is not legally binding and is contestable. This means that your wish may or may not be granted at the end, and for this reason more care needs to be taken. If you have young children, you can grant their guardianship through a will.
• Methods that will prevent your assets from going to probate after death: If you had a will with assets in your name only and no beneficiaries or TODs, all of the assets would go through probate (explained above). Setting up a trust and adding beneficiaries or TOD (transfer on death) on your accounts, for example, can avoid probate.
• Durable Power of Attorney: You can assign someone to take care of your finances and other matters in case of your incapacitation. But this power doesn’t survive your death.
• Living will (advance health care directive): Through this document,  you can express your final wishes regarding medical decisions.

Estate planning is a process that needs to be orchestrated by a lawyer, tax advisor, and a financial planner.