Estate planning allows you to designate the recipient(s) of your wealth upon your death. In addition, the selection of a guardian for minor children is chosen throughout the estate planning process. Oftentimes, estate planning can provide tax savings, tax breaks, or other tax deferments. Estate planning gives you greater control over your assets, who gets them, and in what manner, after your death.
The most common estate planning documents you will most likely need prepared are a: will, trust, durable powers of attorney, and advance health care directives.
A will is a written document disposing of a person’s estate at death.
Estate planning is the process of developing a plan and preparing documents to conserve, protect, and distribute estate assets before and after death for the benefit of loved ones and charities, taking into consideration the effect of state and federal tax and administrative laws and regulations.
A will is a legal document that describes how your assets should be distributed in the event of death. The actual distribution, however, is controlled by a legal process called probate, which is Latin for “prove the will.” Upon your death, the will becomes a public document, enters the probate process, and is no longer controlled by your family, but by the court and probate attorneys. Probate can be cumbersome, time-consuming, expensive, and emotionally traumatic during a family’s time of grief and vulnerability.
A living trust avoids probate because your property is owned by the trust, so technically there’s nothing for the probate courts to administer. Whomever you name as your “successor trustee” gains control of your assets and distributes them exactly according to your instructions.
An estate plan helps ensure that the wealth accumulated during life passes to the beneficiary of choice, in the manner desired, while minimizing taxes and increasing the efficiency of the asset transfer. If you do not determine what you want to happen to your wealth, the state will do it for you at the time of your death and the result may be vastly different from what you intend.