Estate planning is one of the most important steps you can take to help protect your assets, your loved ones, and your legacy. Yet, many people put it off, thinking it’s only for the wealthy or the elderly. The truth is, estate planning can provide benefits for everyone—regardless of age, income, or family situation.
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What is estate planning?
Estate planning is the process of organizing and managing the distribution of your assets and personal affairs after your death or incapacitation. It typically involves writing a will, designating beneficiaries, and setting up trusts, among other legal arrangements.
Why is this important?
Estate planning can ensure that your assets are distributed according to your wishes and may help minimize taxes, avoid probate, and provide for loved ones, especially minors or dependents. It can also allow you to name guardians for children and decide who will manage your affairs if you’re unable to do so.
What's typically included in an estate plan?
The key components of PRIME's estate plans include:
Financial Power of Attorney. These documents allow you to designate your legal and financial representatives if and while you are incapacitated.
Healthcare Power of Attorney (Living Will). Also called “Living Will,” these documents allow you to make decisions about your medical care if and while you are incapacitated. Your Power of Attorney above will make any additional decisions not specified within your Living Will.
Trust Documents. These are the operative documents that permit trust protections to the assets you have placed within the trust. Also designates how, when, and to whom your assets will pass upon your death.
Pour-Over Will. Sometimes included in your trust, this document provides additional protection designating how you would like any assets that were not placed in your trust to be treated upon your death. This is a “back-stop” document that provides additional protection but that may not necessarily be relied upon if your Trust already held all applicable assets at the time of your death.
What is a trust? How does it differ from a will?
A trust is a legal arrangement where a trustee manages your assets on behalf of beneficiaries. Unlike a will, a trust can take effect during your lifetime and avoid probate, offering more privacy and control over how and when your assets are distributed.
What happens if I die without an estate plan?
If you die without an estate plan, your estate will be distributed according to state laws. This can lead to unintended outcomes, higher legal fees, and delays in settling the estate due to probate. It may also result in your children being placed under guardianship by the court.
What is probate?
Probate is the legal process of validating a will and distributing an estate according to its terms or state law. It can be time-consuming and costly, which is why many people use estate planning tools like trusts to avoid it.
How can I avoid probate?
You can avoid probate by setting up a revocable living trust, naming beneficiaries on financial accounts, owning property jointly with rights of survivorship, and using transfer-on-death deeds for real estate.
How can estate planning minimize taxes?
Proper estate planning can reduce or eliminate estate taxes by using strategies like gifting assets during your lifetime, setting up trusts, and taking advantage of exemptions and deductions available under tax law.
This article provides general information about estate planning. It should not be considered legal advice—please consult a licensed attorney for specific legal advice.