What Exactly Is An ‘Estate’?
An estate is comprised of everything that you own – the money in your bank accounts, your financial investments, your insurance plans, your personal possessions (car, real estate, furniture, etc.), basically anything that is under your name. It doesn’t matter how modest your estate is, you will need to create an estate plan for when you pass away.
What Is Estate Planning?
Estate planning is just what it sounds like – planning the distribution of your estate for when you pass. To ensure that your wishes are carried out, you will need to provide instructions stating what you want to distribute to whom, and when they are to receive it. Many of these decisions are going to be influenced by potential taxes, legal fees, or even court costs. This is obviously a condensed version of what estate planning is. Some other things to consider are: creating instructions for passing your values down in addition to your valuables, name a guardian for minor children, transferring your business, etc.
Who Needs To Consider Estate Planning?
Simply put, everyone. Estate planning is not just for ‘old people.’ No one can predict when their death will be and everyone has some amount of valuables (no matter how small their estate may seem). Getting your estate planned will prevent added headache to your family and loved ones, and will ensure that things will be handled properly after you pass away.
What Happens If You Die Without A Will?
Studies have shown that over 55% of Americans will die without a will or estate plan in place. If you die intestate (without a will), then your state’s laws of descent and distribution will determine who receives the property by default – and more often than not, you will want things handled differently than what the state dictates. These laws differ greatly from state to state, but typically the distribution would be to your spouse, children, or to other family members. These laws of descent and distribution reflect the state’s best guess as to how most people would build their states, though this plan may or may not reflect your actual wishes. A will allows you to alter the state’s default plan to suit your personal preferences.
When Should I Set Up A Personal Living Trust?
There are several situations – many unrelated to taxes – for setting up a personal trust while you’re alive. These trusts are often called living trusts or revocable trusts. Some reasons to set up a revocable trust include: