Estate Planning Components

Assuring your loved ones are taken care of after you pass away is one of the purposes of an estate plan. It requires organization and strategy and begins with five key legal documents that can address many areas of estate planning concerns.

Proper estate planning can provide tax savings and asset protection so that the bulk of your estate remains intact as it transfers to heirs. These major components of estate planning can be tailored to your individual needs and goals, regardless of the size of your estate. All estate documents must be part of a legally valid and enforceable plan to fulfill your wishes.

A robust estate plan involves much more than simply creating a will. An estate planning attorney can help you craft a custom plan using these major components to meet your goals and needs while complying with state and federal laws.

A will is a legal document outlining how a person’s asset distributions will occur after death. An executor or personal representative named in the will oversees the asset distribution, proper court filings, and final tax returns for the decedent’s estate. When applicable, your will can appoint a guardian for minor children.

Without a will, known as dying intestate, the court implements asset distribution according to your state law which may not align with your intentions. It’s important to note a will only applies to assets owned solely in the name of the person who made the will. Jointly owned assets or those held in a trust pass directly to a designated beneficiary.

A trust is a legal arrangement in which a trustee holds and manages assets to benefit one or more beneficiaries. Trusts can help avoid probate, minimize estate taxes, and care for minors or those with special needs. A trust is not subject to public probate proceedings as in the case of a will and provides greater privacy as assets don’t become part of public records.

There are many types of trusts, but the most common is a revocable living trust. It allows the person creating the trust, known as the grantor, to retain control of the assets during their lifetime. Upon the grantor’s death, the assets then transfer to the beneficiaries.