If someone was incapacitated or died then an estate plan could help instruct how the individual’s finances were managed. Typically, the individual’s assets, such as their savings, properties and insurance policies are dispersed between family and friends listed in the estate plans. A will is often the first document testators make when planning their estate. Furthermore, an estate plan can include powers of attorney, trusts and child guardians.
If you’re considering making an estate plan, it may help to learn a few facts about estate planning. Here’s what you should know:
Fact #1: Dying without a will can create issues for heirs
Many people die without a legal will, which is called intestate. When this happens, the state probate court has to decide how the deceased’s assets are handled. While this may seem like the easiest thing for people to do, it often creates difficulties for heirs.
The state probate court often doesn’t know the intended wishes of the deceased. As a result, assets may not go to the people who were originally intended to benefit from an estate.
Fact #2: There are more than one kind of trust
A trust is a legal document that can be used to protect assets against probate, dispute and estate taxes – unlike a will. Many people create revocable trusts that allow grantors to alter the contents and instructions of the trust. Once the grantor passes away, this trust becomes irrevocable.
Grantors can also create other kinds of trust. For example, people who wish their pets to receive prolonged care can put assets in a pet trust. Or, a generation-skipping trust can be used to give assets to grandchildren to be used for higher education, for example.
Fact #3: Writing your own will can create legal issues
While many individuals can write their own will, it’s often not the best option. A handwritten or premade can have mistakes that can create legal issues for heirs. For example, an unclear statement in a will may lead to disputes between heirs.
People looking to make estate plans may need to reach out for legal help to understand their options.