Estate planning talks about preparing for what to do with one’s assets after one’s death. The planning can include how to distribute the assets to heirs, how to settle estate taxes and debts, and who receives the guardianship of minors and pets. Some lawyers specialize in estate law and are sought in most estate planning cases. They are the ones who help people develop a plan with the knowledge they have about estate planning.
Estate planning can be used by everyone with assets. It is not limited to just wealthy people, as many tend to think so. You can read more to find out how estate planning works and what items it entails.
Checklist for estate planning
1. Wills and Trusts
Wills and trusts may sound intimidating or give off the impression that only rich people have them, but this is far from the truth. A will or trust can be and should be created by anyone with an estate plan, as it is one of the most valuable steps of estate planning.
A will allows an individual’s properties or assets to be distributed according to their intentions and wishes—a trust, on the other hand, limits estate taxes or debts. But having wills and trusts is not enough, as how you word things in these documents is critically important.
2. Beneficiary Designations
Some of your assets could go to your heirs even if it is not declared in the will, which makes it essential to name a beneficiary and a contingent beneficiary. If you fail to name one or the beneficiary passes on, the decision to distribute your funds and assets will be handed over to a court. And a judge will be unlikely to make decisions as per your wishes and intent, given they would be unaware of your situation or intent.
You can only name people over the age of 21 as beneficiaries; otherwise, a court will get involved.
3. Letters of Intent
A letter of intent is a document one leaves with their executor or beneficiary. A letter of intent contains your plan of what you want to do with your assets after your death. Letters of intent can also include other requests or funeral details.
While a letter of intent is not a legal document, so your executor is not legally obliged to abide by it after you pass away, it at least informs your intentions to the legal authorities. Informing them will help in distributing your assets if, by any chance, your will is invalid due to some reason.