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Estate Planning Isn’t Just for the Rich and Famous

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Estate planning: It’s something that may seem a bit intimidating on the surface, particularly when you consider the many celebrities, noted investors, and other well-heeled individuals who have passed away, leaving sizeable legacies behind. But dig a little deeper, and you’ll discover that estate planning is something everyone should consider – even when assets include nothing more than a few meaningful possessions and a small bank account.

 

This guide begins with a brief, easy-to-follow introduction to a much misunderstood concept. After explaining the definition of estate planning, we provide insight into the basics, all designed to help you determine which step to take next.

 

What is Estate Planning

Who Benefits from an Estate Plan

Estate Planning Basics

Sell Inherited Jewelry With Trust

Sell Inherited Jewelry With Trust

What is Estate Planning?

At its most basic, estate planning is a series of legal steps a person takes to ensure that their final wishes are met. Estate planning can cover finances alone, or it may also include instructions for healthcare professionals, funeral directors, and others who come into contact with you and/or your family.

 

A good estate plan prevents confusion while serving as an outline and a guide, covering topics such as the following:

  • Real estate

  • Financial accounts

  • Personal property

  • Health care in case of physical or mental incapacitation

  • Care and guardianship of any dependents and/or minor children

  • Life insurance policies

  • Funeral arrangements

 
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Who Benefits from an Estate Plan?

Everyone who touches your life benefits from an estate plan – even if only by the assurance and peace of mind that come with knowing that your wishes will be carried out. For example, family members, close friends, and even colleagues who may be receiving an inheritance or a personal token will feel comforted knowing that you planned in advance. The odds of arguments – which can seriously damage personal relationships – will decrease. Common legal problems and taxation issues will be minimized too.

 

If you decide to add a living will and/or health care proxy to your estate plan, you are likely to benefit, as well. These tools serve as outlines for care providers in case you are not able to communicate following an accident or during the end stages of a terminal illness. Certain types of trusts make provisions for health care decisions as well; it is a good idea to conduct research and decide what your preferences are.

 
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Everyone who touches your life benefits from an estate plan – even if only by the assurance and peace of mind that come with knowing that your wishes will be carried out.

 
 

Estate Planning Basics

Everyone who touches your life benefits from an estate plan – even if only by the assurance and peace of mind that come with knowing that your wishes will be carried out. For example, family members, close friends, and even colleagues who may be receiving an inheritance or a personal token will feel comforted knowing that you planned in advance. The odds of arguments – which can seriously damage personal relationships – will decrease. Common legal problems and taxation issues will be minimized too.

 

If you decide to add a living will and/or health care proxy to your estate plan, you are likely to benefit, as well. These tools serve as outlines for care providers in case you are not able to communicate following an accident or during the end stages of a terminal illness. Certain types of trusts make provisions for health care decisions as well; it is a good idea to conduct research and decide what your preferences are.

 
READ MORE: Building a Trust: Why Early Estate Planning is the Way to Go
 

If you decide to add a living will and/or health care proxy to your estate plan, you are likely to benefit, as well. These tools serve as outlines for care providers in case you are not able to communicate following an accident or during the end stages of a terminal illness. Certain types of trusts make provisions for health care decisions as well; it is a good idea to conduct research and decide what your preferences are.

 
Estate planning divides your property into two main categories:

  • Real property, i.e. real estate, land, mineral claims, etc.

  • Personal property, i.e. cash, investments, bank accounts, insurance, and tangible objects such as vehicles, furniture, artwork, etc.

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Once property has been defined and outlined, beneficiaries are named. You can opt to name a single beneficiary, or you may decide to name a number of people who play meaningful roles in your life. Note that beneficiaries aren’t set in stone: You can make changes anytime. It’s also up to you to decide how and when beneficiaries receive their inheritance, and with a little help from a professional, you can also take steps to minimize beneficiaries’ tax burdens.

 

There are different types of estate plans for different situations: If you have minor children to provide for, or if you have a complicated set of assets, then you may decide to build a trust. However, many people find that a will suffices.

 
READ MORE: Downsizing Your House Without Downsizing Your Life
 

While you may believe that a simple note can serve as your last will and testament, there are legal considerations to keep in mind:

  • The will must be executed in accordance with local laws.

  •  

  • An executor must be named; he or she will be responsible for assuring that the will’s terms are carried out according to your wishes.

  •  

  • You must be at least of legal age (18) in most places, although there are exceptions.

  •  

  • You must be of sound mind, and you must understand the will’s parameters.

  •  

  • You must obtain a certain number of witnesses for your will. This number varies by location.

  •  

  • In some places, your signature must be notarized, as must those of the witnesses you have chosen.

 
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If you have already created a handwritten will, which is also known as a holographic will, you’re off to a good start – in fact, it may be considered legal in your area. What you may not realize, though, is that these types of wills often go through lengthy, court-supervised probate processes, burdening heirs and leading to conflict that might damage relationships.

 

Additionally, wills may be contested whether they meet legal requirements or not. If you are concerned about this aspect of estate planning, it may be better to take advantage of a trust’s ability to distribute property according to your specific wishes.

 

Where to begin? Many banks, law firms, and independent lawyers offer estate planning services, and it costs very little to get the process started by drawing up a basic will or learning about different types of trusts. You can always make modifications later as your situation changes. Whichever steps you take toward preparing for the future, your loved ones will appreciate the forethought and consideration you showed by taking a little time to focus on estate planning.

 

Think that estate planning is beyond your tax bracket? No matter how much or how little you have, estate planning is something everyone should consider.
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