Estate planning is a process that ensures that your assets are properly handled after your passing. This process is often complicated and there are many things you’ll learn along the way.
If this is the first time you’re making an estate plan, here are some things you should understand:
1. Trusts and wills are different
A trust and a will are two very similar documents that essentially distribute assets according to the testator’s wishes. However, a will is a basic estate planning document that most people create. A will may also have estate taxes removed or be contested. While a trust can avoid these issues by giving assets to a trustee to hold temporarily and distributing them according to the testator’s wishes.
2. Estate planning isn’t just for the rich and elderly
Many people are under the belief that estate planning is either for people who have a fortune or people who are much older. However, estate planning is beneficial for anyone, especially for people who are younger. For example, if you suddenly suffer an accident and are incapacitated then you may need help from a power of attorney and child guardian.
3. You can update your estate plans
Estate planning isn’t a one-and-done process. You can update your estate plan when you wish to make changes. Many people update their estate plans every few years or after, for example, marriage or divorce.
4. Dying without a will is called intestate
If you die without a will, then you’ve died “intestate.” Intestate would mean that your estate is administered by the state. The state doesn’t know what your last wishes were, which could mean assets aren’t properly given to the heirs you wish to name, so they simply use an official chart and distribute everything according to those rules based on your legal relationship to each heir.
When drafting an estate plan, you may need to reach out for help to ensure you’re covering all of your legal options.