Estate Planning Pros

Estate planning is a critical legal process that organizes the distribution of your assets upon your death, including items like real estate, personal possessions, and investments. It’s not only about wealth—it can also cover aspects like who will take care of your children if they’re minors, or even decisions about your health care if you become incapacitated. The importance of estate planning lies in its ability to ensure your wishes are respected, to reduce potential disputes among heirs, and to minimize tax liability. It’s about making things easier for your loved ones and ensuring your final wishes are carried out.

Dying without a will or estate plan—known as dying intestate—leaves the distribution of your assets to state “intestacy laws”. These laws may not distribute your assets as you would have liked, and the process can cause stress and potential conflict among your surviving family members. Additionally, without a will or a thorough estate plan, your estate could be subject to unnecessary taxes and fees, leading to potential erosion of your wealth. Therefore, it’s crucial to have an estate plan in place.

A will and a trust are both essential components of estate planning but serve different purposes. A will is a legal document that dictates how your assets should be distributed after your death. A trust, on the other hand, can be used to distribute property before death, at death, or afterwards. A trust can help avoid the public and potentially lengthy probate process (required for a will) and can provide privacy, as the details of a trust aren’t made public. Wills, conversely, become public record once they are probated.

Your estate plan should ideally be a living document that evolves with your life. As a general rule, consider reviewing and updating your estate plan every three to five years. However, significant life events, such as a marriage, divorce, birth or adoption of a child, death of a beneficiary, or substantial changes in your financial situation, should also trigger a review. Changes in estate laws should also prompt you to revisit your plan.

Choosing an executor or trustee requires careful thought. This individual will be responsible for carrying out your wishes as expressed in your will or trust. Key factors to consider include their trustworthiness, reliability, organizational skills, and willingness to take on the task. It’s a demanding role that requires time, effort, and often, the ability to navigate complex legal and financial matters. It’s also crucial that this person can maintain a neutral, fair approach when dealing with beneficiaries. You may also want to consider their age, health, and geographical location. An attorney, financial advisor, or corporate trustee (such as a trust department at a bank) can also serve in this capacity.