Estate Planning Basics

ESTATE PLANNING BASICS

Death is inevitable. There are some steps and planning we should take to put our affairs in order. This can be accomplished through proper and effective estate planning. Estate Planning provides peace of mind by knowing that your desires are recorded and your property will be disposed of as you desire. The following are some introductory questions and answers on estate planning.

Q: WHAT IS MY ESTATE?

Your estate consists of all the property and personal belongings you own or are entitled to possess at the time of your death. This includes real estate, personal property, cash, savings and checking accounts, retirement accounts, stocks, bonds, automobiles, jewelry, etc.

Q: WHAT IS PROBATE?

Probate is the legal process of settling the estate of a deceased person; specifically determining the validity of the Will, resolving any claims, paying debts and expenses, and distributing the decedent’s property to heirs and
beneficiaries.

Q: CAN PROBATE BE AVOIDED?

Absolutely.  Assets held in a Trust avoid probate since the trust provides a succession plan for all assets with both a successor trustee to manage the assets and beneficiaries who receive the assets after paying the same debts and expenses of your estate.

Q: WHAT ELSE IS NOT PART OF MY ESTATE (PASSES OUTSIDE OF PROBATE)?

Although the proceeds of insurance policies may be considered part of your estate, a Trust or Will does not change the designated beneficiaries of an insurance policy nor retirement accounts. Instead, the proceeds will normally pass to the beneficiaries designated in the policy or plan.  The
money in the account goes directly to that individual when you die, bypassing probate and thereby the money is not considered part of the estate.  Of course if life insurance pays directly to the trust, or a retirement account pays directly to a qualified trust, then the terms of the trust will determine how the proceeds are to be distributed.

Q: WHAT IS ESTATE PLANNING?

Estate planning is a process of making decisions during your lifetime about the use, maintenance, and disposal of your property and personal belongings upon your death or disability. It provides peace of mind by knowing that your desires are recorded and your property will be disposed of as you desire. Good estate planning entails a trust far more often than a Will. From a financial standpoint, a thorough and effective estate plan minimizes any potential taxes and determines what will happen to your home, your savings and investments, your retirement plan, a business, and other property if you become disabled or die.  A trust can also preserve your assets for your children until they reach the age you set for distribution or held in trust for their lifetimes to avoid creditor and divorcing spousal claims.