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What is an estate plan? 

On Behalf of | Feb 4, 2023 | Estate Planning

Estate planning is the preparation for the distribution of your estate in anticipation of your passing. An estate plan is made during the testator’s life. Typically, an estate plan includes a will, trust, beneficiaries, executor of the estate and power of attorney.

While an estate plan seems complicated, it often only requires a few decisions. When making these decisions, you should better understand each part of your estate plan.

It should include a will

A will is a legal document that expresses the testator’s last wishes, which includes who’ll inherit from the estate and funeral arrangements. The will might say that a single spouse or child will inherit from the estate, for example. If the testator passes away without a will then the state will step in and distribute assets according to their rules – oftentimes, that means against the testator’s wishes.

It might include a trust

A trust is a legal document much like a will. While many people make wills, there is often more security in making a trust. This is because a will may include estate taxes and a probate process. Probate is the time it takes to verify a will and distribute assets.

Instead, people who make trusts can allow their heirs to forego probate and estate taxes. Trusts are also a bit more flexible, for example, you could give an inheritance to a child after they become an adult, unlike a will.

You name an executor of the estate

Someone has to distribute the estate when the testator passes away, that’s where the executor of the estate steps up. The executor is responsible for submitting important documents and protecting and distributing assets after probate.

You designate your powers of attorney

A power of attorney is a representative who makes decisions on behalf of the testator should they become incapacitated. These decisions will involve any medical or financial matters.

If you’re ready to make an estate plan, then you should understand your legal options.