Estate plans - not just for the wealthy
When you hear the word “estate,” you may think of mansions with sprawling manicured lawns and landscapes. While this is what often comes to mind, you do not have to be wealthy to have an estate or need an estate plan.
What is an Estate Plan?
An estate plan is a series of legal documents that dictate how your assets will be managed during your life in the event of incapacity and disposed of after your death. Estate planning is the process of making those decisions for the management and disposal of your estate and drafting the legal documents to execute your plan. Your estate consists of all the property you own, such as your house(s), land, retirement, investment and savings accounts, cash, cars, clothes, jewelry, and any other items of personal property.
The key advantage of having an estate plan is the power to decide for yourself how you want your estate administered. While you are alive, you are in control in choosing who inherits your estate, what they will receive and how they will receive it. You can create your estate plan in a way that minimizes or possibly eliminates the probate process (a public court proceeding), which can be costly, lengthy and lacks privacy. You can also create your estate plan in a way that minimizes gift, estate, and income tax for your beneficiaries.
Do You Need An Estate Plan?
Yes; individuals at every age should have an estate plan that fits their current situation. A single 20-or 30-year-old just starting their career may only need a simple will and power of attorney designations, whereas an older, established professional or retiree may also need a revocable trust, life insurance, beneficiary designations among other things. The more complex your situation is (kids, multiple marriages, blended families, businesses, wealth, charitable intent, etc.) the more detailed your estate plan may need to be. Your estate plan will look different and evolve throughout your lifetime depending on your family and financial situation. It also should be periodically reviewed and revised whenever significant life changes occur, such as the birth or death of a family member, an increase or decrease in your wealth, or a change in marital status.
It is important to talk to and collectively work with your trusted advisors, such as your attorney, tax professional and financial advisor when drafting your estate plan. You not only want to make sure that your intent is clear, but that you have planned the administration of your estate in the most advantageous manner possible for your beneficiaries and that all your estate planning documents work harmoniously together.
To help unburden your loved ones upon your death, you may also want to consider naming a corporate fiduciary, such as a bank or trust company, as the Executor of your estate or Successor Trustee of your Trust, should you need one. A corporate fiduciary, like FirstBank & Trust, will carry out your estate plan in an unbiased and impartial manner, providing you with the peace of mind that your estate plan will be fulfilled as you intended.
What Happens if You Do Not Have an Estate Plan?
If you die without a will, you will have died “intestate.” When this happens, the intestacy laws of the state where you reside will determine how your estate will be distributed. Your loved ones will have no control over the distribution of your property, or who will care for your minor children (if you have any) and how they will be cared for. The court, through the probate process, will make those decisions for you, which might not be the way you would have wanted. And, depending on your situation and the type of assets in your estate upon your death, this could take years to resolve and result in costly fees and expenses.
Estate planning is not just for the wealthy. Regardless of your age or wealth, settling your affairs after you die without a plan in place could have a long-lasting and costly impact on your loved ones. If you want control over how your assets are managed and distributed and want to protect your loved ones after your death, you need an estate plan. Don’t wait until it’s too late and let the state you live in dictate how your hard-earned assets are disposed.
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