Now that we’ve brought the importance of Estate Planning to light, let’s talk about exactly what it entails to help you take next steps.
What is Estate Planning?
It’s the process of arranging for the dissemination of your estate and is used to clear up any uncertainties during the probate process after your passing. An ‘estate’ can typically include: real estate, bank accounts, stocks and securities, life insurance policies, personal property such as jewelry, vehicles, artwork. Estate Plan is the entire legal document consisting of individualized components designated for certain assets and plans such as Last Will & Testament, Living Will, and/or Trust.
A basic plan for those who have a relatively small estate that is not subject to estate tax. For many, a Simple Will covers most primary planning areas, including: distribution of property, guardianship of your children, naming someone to handle the finances for your children and choosing an executor for your estate. See our post, What Makes My Will Legally Binding? where we outline other considerations to be mindful of.
Living Will (aka Advance Medical Directives)
This is not actually a Will. It's a document designed to specifically outline your desires in regards to your medical care and treatment should you ever be faced with a terminal illness or condition that leaves you incapacitated and unable to speak for yourself. A Living Will often covers your wishes regarding the use and duration of life support, medication preferences, artificial nutrition and resuscitation.
Last Will & Testament
Is the primary document as part of an estate plan where you name those who will receive the items in your estate upon your death.
Is a legal mechanism that lets you put conditions on how and when your assets are distributed after you die. A trust is typically used in the event that you desire your assets to be distributed over an extended period of time as opposed to full distribution at the time of your death.
Is the legal process of administering your Estate Plan instructions upon your death. It is a court-supervised process that ensures property is collected and distributed and that financial matters are resolved. For further helpful information on the Probate process, check out our recent post, 3 Times Probate Gets Really Expensive.
Important to Note: Life Insurance/401k/IRA Beneficiary: Typically your beneficiary designation on these types of vehicles override the provisions of your Will or Trust so it is important to check who your designated beneficiaries are on these accounts to ensure your most current wishes are indicated.
Have your own business? Check out, What will Happen to my Business if Something Happens to Me? and Recent Tax Court Case Concerning Family Businesses a Plus for Estate Planning to find out how your business fits in with your plans and important things to consider.
In our next post we’ll offer tips on what to consider when determining your Estate Plan provisions to help ensure it’s complete and effective.
As always, the publication of this post does not create an attorney-client relationship. Nor can the posting be considered “advice” as every situation needs to be evaluated according to its own facts. These posts are intended as informational only and you should always contact an attorney licensed in your state for information about your specific situation.