You may have heard the term estate planning thrown around, but what exactly does it mean? Estate planning is the process of deciding what will happen to your assets and belongings after you pass away. As a beginner looking into estate planning, there are a few key things you need to know to get started on the right track.
What an Estate Plan Includes
An estate plan isn’t just one document; it’s a collection of legal documents that all serve different purposes. These include a last will and testament, which outlines who gets your possessions and assets. You’ll also want to have a living will, a healthcare power of attorney, and a durable power of attorney. These give guidance on end-of-life care decisions and allow someone to handle finances for you if you’re ever incapacitated. Drafting these documents with an estate planning lawyer ensures everything is legally binding. Remember, documents like a will aren’t set in stone either. You can always make changes as your circumstances evolve over the years.
Beneficiaries and Executors
When making an estate plan, you must decide on beneficiaries for assets like life insurance policies, retirement accounts, and the property designated in your will. Beneficiaries are the recipients of these assets after your death. You’ll also need to designate an executor in your will. The executor is the person who ensures the directives in your will are properly carried out.
Estate Taxes and Probate
Two estate planning terms you may come across are probate and estate taxes. Probate is the legal process of distributing your property after death according to your will. Simpler estates can sometimes avoid probate, saving time and money. Estate taxes are levied by the federal and sometimes state governments on assets over a certain value in your estate when you die. .
Estate planning can seem confusing at first. That’s why working with an estate planning lawyer is so valuable for beginners. A lawyer can answer all your questions on wills, trusts, asset distribution, and taxes to help you create a plan tailored to your unique situation. According to LegalZoom, of the estate plans made in 2021, 75.12% were wills, 18.78% were trusts, and 6.1% of people nominated a guardian for their young children. Therefore, it’s important to get estate planning documents drawn up by a professional estate planning lawyer!
