Everyone can benefit from estate planning. This is because your estate plan is more than just a list of who you want to give your property to. The plan includes additional documents such as a power of attorney, which gives someone the authority to make decisions on your behalf, and a medical directives guide, which outlines your wishes for your medical care if you are unable to make those decisions yourself.
A typical estate plan will include the following pieces:
A trust is a legal entity that you can place your assets into. Creating a trust gives you more control over your assets because you get to design the rules of the trust. You decide how, when, and where the assets in the trust are distributed to an heir or beneficiary.
There are several benefits to setting up a trust. First, the assets in the trust do not need to be probated. If you establish a revocable living trust that terminates when you die, the assets in the trust will pass immediately to the beneficiaries. This saves your beneficiaries time and money. Other benefits include tax advantages for the creator of the trust and the beneficiaries, privacy from the public probate process, and the continuing effectiveness of a trust even if the creator dies or is incapacitated.
Probate is the legal process that takes place after someone dies. It includes proving to the Court that the deceased's will is valid, identifying and inventorying the deceased's property, having the property appraised, paying the deceased's outstanding debts and taxes, and distributing the remaining property as the will (or state law, if there is no will) directs. Probate can take anywhere from 1-3 years, depending on your state's laws.