What is an estate plan, and why do I need one?

At its most basic, an estate plan dictates how your assets will be managed and distributed upon your death. An estate plan can, and should, however, encompass more than just the disposition of your assets. It can include planning for future incapacity, estate tax mitigation, and burial and funeral arrangements, among other things.

The following are some of the fundamental benefits of implementing an estate plan:

  • You decide who inherits your assets upon your death. Without an estate plan, state law determines who inherits your assets.
  • You decide how and when your beneficiaries receive their inheritance (e.g., outright vs. in trust, distributions immediately or over time). Without an estate plan, the terms and timing of distributions are set by law, which can result in your beneficiaries receiving a sizable inheritance outright, with no restrictions.
  • You choose who will manage your assets upon your death. Without an estate plan, a court will appoint individuals to fulfill these duties.
  • You designate a guardian for your minor children. Without an estate plan, a court will appoint their guardian, and may not choose the person you would have picked.
  • You can minimize or avoid the probate process, if desired. Without an estate plan, some or all of your assets will likely be subject to probate.
  • You can minimize taxes payable by your estate and your beneficiaries upon your death. Without an estate plan, Uncle Sam may be the ultimate beneficiary.
  • You decide who will make financial and health care decisions for you if you become incapacitated. Without an estate plan, a court will appoint a guardian to make financial and health care decisions for you.

In other words, estate planning gives you control over the management and distribution of your assets and your health care decision-making, both during your lifetime and upon your death. Without one, you may be leaving certain important details to chance.

If you have questions on this topic, please contact Lin Law LLC at (920) 393-1190.