Estate planning and estate administration are the two sides of the process of transferring assets from yourself to your loved ones.
Everyone already has an estate plan. If you haven’t created your own plan, your state laws have a default plan that may or may not be what you intend.
Every state has laws for intestate succession, which means the person who died did not have a will. These default laws attempt to do what most people would likely intend and they give your assets to your family. If you are married, a portion, if not all of your estate, will go to your spouse. In step-families, the estate would be divided between your spouse and your children. If you are single, your estate goes to your parents, or if they are gone, to your siblings. The default laws follow your family tree. But, families are complicated and the default laws cannot plan for each family’s unique circumstances.
Sometimes, people will say, “But I don’t have an estate. I’m not rich.” Everything you own is all part of your estate. The stuff in your apartment. Your car. Your checking account. Your life insurance. Everything. Even if you have a mortgage on your house or a loan against your car, you still own that asset and it is part of your estate that either needs to be sold or transferred.
Estate planning also includes planning for your end of life care and potential incapacity. We all need help at some point and it is important that you name someone you trust to act on your behalf and in your best interests.
By creating an estate plan, you leave a road map for your loved one’s to help you and them through trying times and to make sure your wishes are known. A good estate plan eases the process after a love one passes, helping pass assets efficiently and effectively without unneeded complexity, costs or drama.