No matter whether you are rich or earn just enough to support your family, everyone needs an estate plan despite how much they earn. It is one of the most important duties of a person to plan their estate before they die. This prevents confusion and disagreements after you die, plus your assets can be distributed in the way you want.
If you are considering creating an estate plan and do not know anything about it, you should learn a few terms before getting started. For more information and to get to know the term in-depth, consider speaking to an Estate Planning Attorney today.
Common but important terms in estate planning
- Estate: A person’s estate is everything they own, including money and property.
- Estate planning: Estate planning is the process of arranging your assets and preparing tasks to manage one’s money and property in the event of death or incapacitation. The estate plan decides how your property will be divided after you become incapable of making the same decision.
- Asset: An asset is a property that a person owns at the time of death. This includes bank accounts, real estate, jewelry, artwork, investments, retirement savings, household furnishings, business, computers, vehicles, smartphones, and debts owed.
- Will or Last Will and Testament: A Will is a legal document specifying how your property will be distributed among your family members, friends, or anyone you want upon your death. This makes sure the distribution takes place without any disagreements or disputes in the family.
- Trust: A trust sets aside money or property for a person that the grantor wants to give to someone in the future. Investment accounts, houses, and cars are examples of what you can hold in trusts. Trusts also avoid taxes and probate, a great way to make gifts for your loved ones.
- Probate: When a person dies, their Will is analyzed by the court to check whether it is valid or not. People who pass without a Will cannot have their way with their estate. The court makes decisions on who receives which asset and how the debts are paid.
- Executor: After a person’s death, the Executor looks after the probate process and makes sure everything goes according to the deceased person’s wishes. They are also responsible for overseeing that the instructions are carried out well.
- Guardian: If you have minor children, you can pick someone to be the guardian of your kids. A guardian looks after minor children or children who are mentally or physically unable to look after themselves. They also get the authority to make decisions about their child’s life.