What Is Estate Planning?
Estate planning is a process by which you set up legally effective arrangements (that meet your specific wishes) if something happens to you or those you care about.
Now, bear in mind that good estate planning is more than just a simple will. Estate planning also typically minimizes potential taxes and fees, and sets up contingency planning to make sure your wishes regarding health care treatment are followed.
On the financial side, a good estate plan coordinates what would happen with your home, your investments, your business, your life insurance, your employee benefits (such as a 401K plan), and other property in the event you became disabled or if you die. On the personal side, a good estate plan includes directions to carry out your wishes regarding health care matters, so that if you ever are unable to give the directions yourself, someone you select would do that for you, and know when you would want them to authorize heroic measures and when you would prefer they pull the plug.
Do I Have to Have a Will?
No, but if you do not have a will then your assets will be distributed “intestate.” What this means is that your property will be distributed to your “heirs” (usually your spouse and children) by a procedure that each state has created. The term heirs can be different in every state. Each state may also divide up property differently than you would like. Thus it is important to have a valid will.
What Happens If A Person Dies Without A Will?
If a person dies without a Will, he/she will be considered to have died intestate. In this case, property will be distributed by the states laws. Often, the surviving spouse will get half the estate and any children will inherit the other half. If a person dies without a Will and without any trace of any heirs, all property will escheat (be turned over) to the state.
When Should I Start My Estate Plan?
The only time that you can prepare and implement an estate plan is while you are alive and have legal capacity to enter into a contract. If you are unable to manage your own affairs or suffer from some other disability which affects your legal capacity, your estate plan may be effectively challenged by those who assert that you lacked capacity at the time the documents were created, that you were subjected to fraud, coercion or undue influence during the creation and implementation of your plan.
What Sorts Of Instructions Are Made As Part Of An Estate Plan?
An estate plan consists of one or more documents that set forth instructions. Some documents are used to control health care decisions, others control your property in the event of your incapacity, and still other documents will control the distribution of your property in the event of your death.
What About Books on Estate Planning?
As you begin the process caveat emptor (let the buyer beware). There is a lot of information out there; while some of it is very good, some is misleading at best. There are many general overview guides to estate planning available at bookstores. Some are pretty decent, most are awful. If you are planning to do it yourself, be prepared to spend a fair amount of time on this project.
The information on this page is meant to provide a general overview of the law. The laws in your state and/or city may deviate significantly from those described here. If you have specific questions related to your situation you should speak with a local attorney.
Additional Estate Planning Articles
- Estate Planning
- What Happens When a Person Dies Without a Will?
- Protect Your Children With Your Last Will and Testament
- Naming a Guardian for Your Children
- Power of Attorney, Durable Power of Attorney & Health Care Directives: What Is the Difference?
- The Uniform Transfers to Minors Act: An Overview
- Naming Children as Life Insurance Beneficiaries
- What rights do I have in planning a funeral?
- How to Prove and Recover Damages for Trust Mismanagement
- How to Decide if You Need a Trust and Estates Attorney
- What is a variable annuity, and how does it work for estate planning purposes?
- Estate Planning: The Advantages of Annuities
- What are the differences between annuities, IRAs, and 401(k) plans, and how do they fit into my estate plan?
- What are the tax advantages and/or implications of annuities?
- What are the potential pitfalls of annuities?
- Family Limited Partnerships
- When Is the Right Time to Start Your Estate Plan?
- What are Some Typical Estate Planning Documents?
- Is There Any Way To Avoid Probate?