Most people hear the word “estate” and conclude that, since they don’t have a mansion and thousands of acres of land, they don’t need an estate plan. Many are surprised to learn that they do, in fact, have an estate. And, if they would like any say at all in where and how their personal belongings, property and financial assets are transferred when they die, they should seriously consider taking steps now to put such a plan in place.
What is my estate?
Your estate contains all your assets, including:
- Bank Accounts
- Stocks, Mutual Funds and Bonds
- 401(k) plan funds
- Real estate
- Buildings and homes
- Life insurance payouts
- Tax refunds
- Art or coin collections
What is an estate plan?
It’s a collection of documents designed to protect your assets (your estate). It describes how and to whom you want to allocate your assets, and it identifies the people who you want to carry out your wishes when you are no longer able to do so yourself.
What does an estate plan usually include?
- A will. Activated upon your death, a will identifies: 1) your executor, the person who will oversee the estate plan process; 2) your beneficiaries, those who will be receiving your assets; and 3) a guardian, the person who will be responsible for caring for your minor children.
- A financial power of attorney. This person will make financial decisions on your behalf when you’re no longer able to do so, and will pay your bills, manage investments and make legal or business decisions that are in your best interest.
- A medical power of attorney. This person will be responsible for making medical decisions for you when you cannot speak for yourself.
- A living will. This document articulates your preferences about end-of-life preferences, (e.g., your views on life-sustaining treatments, such as cardiac resuscitation, insertion of feeding tubes, etc.).
- A trust. This document explains how and when your assets are to be distributed. Some trusts can reduce or eliminate taxes on your estate and can minimize a costly and lengthy probate legal process.
Do I need all these documents?
Not necessarily, depending on your life situation. That’s why it makes sense to contact an experienced and trustworthy legal counsel, who understands state laws regarding estate planning and estate taxes and can advise you on which documents are most beneficial to you.