What is an estate plan?
An estate plan or estate planning is the process by which an individual or family arranges the transfer of assets in advance of death. Typically an estate plan attempts to preserve as much wealth as possible for the beneficiaries included in the estate plan. Some of the benefits of estate planning or having an estate plan include:
- The naming of a guardian for the care of any non adult children or children with special needs
- Specifies instructions for your care and financial affairs if you become incapacitated before death
- The minimization of taxes, court costs, and legal fees related to the distribution of your assets.
Generally, when a person passes without a will or trust, their money and property will be distributed according to state law. Essentially the state will determine who gets the property based on their relationship to the person who passed. Some property, such as insurance policy proceeds, joint bank accounts and retirement accounts will be distributed to the person you designated as the beneficiary of that specific account. In most cases, the company providing the account allows you to specify a beneficiary. In the case that it is a joint account, the other person on the account with you usually gets the balance when you pass.
One way you can control the distribution of your property after death is through a will. But, even though your will can provide for information on how to distribute your assets, your beneficiaries or a named executor will still need to go through a court process called probate to distribute your property. You can also arrange for the distribution of your property through a living trust.