Many people incorrectly think that estate planning simply involves drafting a will or trust. However, the process involves more planning and paperwork in order to give you more control of your assets. Here are three things to understand about estate planning.
1. Will/Trust
Writing a will or trust is one of the main components of estate planning. Some people assume that this step is only for the wealthy, since homes, vehicles and other assets are typically considered most valuable. Conversely, everyone can benefit from drafting a will or trust. Here are the main differences between a will and a trust:
- A will goes into effect once you die
- A trust is effective immediately
- A will distributes your assets after you die
- A living revocable trust can be changed during your lifetime
- A will can be contested in probate court
- A trust enables you to avoid probate court
If it seems overwhelming to understand the differences between a will and a trust, relax. An estate planning lawyer Westport CT can help you design an estate plan that meets your changing needs.
2. Beneficiaries
Part of planning your estate includes designating beneficiaries. A beneficiary is a person, or people, that you choose to receive your assets once you die. There are at least three reasons to designate beneficiaries: 1) clarity, 2) speed and 3) control. First, the passing of loved ones sometimes causes people to act crazy. By clearly stating who gets specific assets, you can eliminate major arguments. Second, by assigning beneficiaries, most of your assets will bypass probate court. And finally, choosing beneficiaries gives you control over who receives your assets after you die.
3. Guardianship
If you have young children, planning who will care for them once you die is extremely important. The worst-case scenario of not appointing a guardian is that your children are assigned to the state. During estate planning, be sure to select guardians and contingent guardians who are willing and financially able to care for your children.
Estate planning is important for all people. Consider meeting with an estate planning lawyer to discuss your needs.
