estate planning (2024)

FAQs

Estate planning? ›

Estate planning involves determining how an individual's assets will be preserved, managed, and distributed after death. It also takes into account the management of an individual's properties and financial obligations in the event that they become incapacitated.

A will is an important legal document that specifies how you'd like your assets divided up upon your death. An estate plan is a broader concept that pulls together multiple legal documents.

Estate planning is all about protecting your loved ones, which means in part giving them protection from the Internal Revenue Service (IRS). Essential to estate planning is transferring assets to heirs with an eye toward creating the smallest possible tax burden for them.

Failing to review and update your Will, Trust and Power of Attorney. Failing to plan to avoid Estate Taxes. Failing to leave assets to anyone other than your spouse. Failing to update beneficiaries on life insurance and retirement accounts. Failing to provide liquid assets to pay estate debts.

Most relatively simple estates (cash, publicly traded securities, small amounts of other easily valued assets, and no special deductions or elections, or jointly held property) do not require the filing of an estate tax return.

While an Estate is merely the total value of a person's assets after they pass away, a Trust is a legal entity designed to hold, manage and distribute assets on behalf of beneficiaries. One is the assets themselves and the other is a legal entity designed to hold and distribute them.

Most estate planning attorneys will tell you that a last will and testament is the foundation of any good estate plan. The document sets out your wishes for distributing your property after you die and who will care for your minor children.

Wills and trusts are legal instruments that ensure your assets pass to heirs according to your wishes. The main difference between wills and trusts is that wills take effect after you die, while trusts can take care of your assets while you're still alive.

Who is the primary beneficiary in a will? ›

A primary beneficiary is an individual or organization who is first in line to receive benefits in a will, trust, retirement account, life insurance policy, or annuity upon the account or trust holder's death. An individual can name multiple primary beneficiaries and stipulate how distributions would be allocated.

There are different types of wills, but the four main types are wills: simple, testamentary trust, joint, and living wills. Each type is meant for different situations, satisfying varying individual needs and circ*mstances as part of your estate planning.

An executor administers a person's estate upon their death. An executor may be named by the testator or by a court. The primary duty of an executor is to carry out the wishes of the deceased person based on instructions spelled out in their will or trust documents.

Not believing it's necessary

Some people just don't think that an estate plan is necessary, perhaps for financial reasons. They think that they need to be exceedingly wealthy for an estate plan to make sense. But an estate plan can be beneficial for everyone, and it's not just about money.

What is the purpose of making an estate plan? An estate plan helps your family avoid disputes about what your intentions were. An estate plan also helps your loved ones carry out your wishes if you should become medically incapacitated.

One of the biggest mistakes people make with their wills is not executing it properly. Typically for your will to be valid, you need to sign your will in front of two witnesses, who also sign it. After you pass away, your witnesses may be called to court to confirm that the will was truly yours.