An “estate”, what’s that? An estate is the sum of a particular person’s assets. This includes legal rights, interests in property, and money, minus all liabilities. The term “estate” is commonly used in reference to what a person owns when they pass away and subsequently, what happens to those things.
If a person does not have anything in place designating where their estate is to go upon death, that person is considered to have died intestate and a court will determine who your estate will go to. Estate planning allows you to designate the person(s) your estate will go to after your death. If a person dies with an estate plan, that person is said to have died testate. Regardless of whether a person dies testate or intestate, the personal representative or administrator (the person in charge of distributing the estate) will necessarily have to go through probate to ultimately distribute the estate.
Each state has intestacy laws that designate the distribution of an intestate estate when such an estate goes through probate. However, as mentioned above, it is not necessary to leave the fate of your estate up to laws that don’t take into account the intricacies of your life. There are many different ways to approach estate planning based on the size of the estate, the particular wishes of the person, and family circumstances. However, for a small estate, a basic estate plan should include, at the minimum, three important components:
1. Will. A will allows you to ensure that your belongings will go to the desired beneficiaries. Additionally, if you have minor children or are considering having children, you are able to choose a person to act as guardian over your children in the event of your death. A note that probate is still required to validate the will, but the presence of a will often speeds up the probate process considerably.
2. Durable Power of Attorney. A durable power of attorney allows you to assign a person to act on your behalf in the event of your disability. This person, as your agent, would have the power to make legal decisions as if he/she were you.
3. Advanced Healthcare Directive. In an Advanced Healthcare Directive, you are able to designate the person that you wish to make your healthcare decisions for you when you are unable to make those decisions for yourself. Additionally, you are able to record your healthcare wishes.
A basic estate plan will not be adequate for some estates. For instance, larger estates may benefit from a trust, of which benefits have been written about in earlier blog posts.
If you would like to discuss the benefits of planning your estate in more detail, please contact us. We can assist you in deciding how to best effectuate your wishes!