As is often said, everyone has an estate plan. It’s just a question of whether or not you created it or settled for the one provided for you under the intestacy laws of your state of residence. Most folks don’t realize this, nor are they aware that, no matter how large or small, they do, in fact, have an estate.
When it comes to managing your personal and financial affairs, you’re likely to want to have a say in the matter, and that’s where proper planning comes into play. An estate plan need not be terribly complex or expensive, but should carefully detail your intentions in the event you are unable to communicate them.
Importantly, your estate plan is not just about the distribution of property after your death. It also explains how you’d like to have your health and wealth managed for you, if necessary, while you’re still alive. Here is an overview of the essential documents that should be part of everyone’s estate plan.
As many people do, you’re likely to name your spouse as your Executor and/or agent, but be sure to name competent successors. In the event of a tragic accident involving both of you, your hand-picked successor will then be called upon to act. name competent successors.
As alluded to earlier, probate is the process by which your will is affirmed by a judge, and your Executor is empowered to act on your behalf. It is a public process (raising privacy concerns for some families) that can take several months to complete and can be costly, particularly if your will is contested. Any costs will be borne by your estate.
In order to mitigate the complications of probate, you might choose to utilize a trust. A trust is a written legal agreement that designates who (one or more trustees) will be responsible for managing and, ultimately, distributing the assets you put into it. Trusts fall into one of two basic categories: revocable and irrevocable. As you might expect, a revocable trust can be changed (or even revoked) during the life of the person who created it. Irrevocable trusts, on the other hand, can only be changed in certain limited ways (such as who serves as trustee).
When you fund a revocable trust, you retain control (you can be the sole trustee of your own revocable trust) of the assets and have unfettered access to them. As a result, the assets remain part of your estate but will not be subject to probate. A properly written irrevocable trust, on the other hand, is a separate legal entity. Any assets contributed to such a trust are removed from your estate and, to a certain extent, from your control. They will thereafter be managed according to the terms of the trust by your designated trustee.
Whether or not you need a trust will often depend on the size and complexity of your estate. Some families can get by without one, but others may find that by having one, they are better able to manage issues related to privacy, taxes, creditors, family dynamics, or philanthropy.
Of course, your particular circumstances might call for additional planning and/or documentation, and we recommend you consult with a qualified estate planning attorney. If you don’t have one, we can refer you. There is a cost, to be sure, but you’re likely to find the peace of mind that comes from knowing your affairs will be settled according to your wishes will be well worth it.
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