What is an Estate Plan?

Traditionally, estate planning has involved creating a will. A will is a legally binding document that addresses how your assets will be distributed at your death and also names an executor who will assist with the administration of your estate. Settlement of your estate may be supervised by the probate court. This process depending on the nature of your estate can last as quick as 6 months for a simple estate or up to 1-2 years for more complex estates.

A will is a flexible tool that can be changed at any time as long as you are mentally competent. In addition to naming distribution of the estate, your will can:

• Designate a trust to be established for family members after assets go through probate. (This type of trust is known as a Testamentary Trust not to be confused with a Living Trust.)
• Nominate a guardian.
• Direct how debts, taxes, and expenses are to be paid.

Some of the advantages of a will are:

• Disputes can be settled through the probate court.
• A will is traditionally cheaper to prepare than a trust ($200 to $2,000).
• The probate process can lessen the time allowed creditors to make claims against your estate.
• Probate estates can select a fiscal year rather than a calendar year for income tax purposes.

Some the disadvantages of a will are:

• Lack of privacy: Your files can be accessed through the records office.
• Time: Probate can take 6 months to 2 years or more until distribution is administered.
• If you own property in more than one state, then probate needs to be held in each state. " Probate and legal fees can range anywhere from 3% to 10% of your gross estate.
• If you should become incapacitated, a will does not make any provisions. You need a separate Durable Power of Attorney.

By preparing a will, most people feel they have effectively safeguarded their family's inheritance. However, this is often a false "peace of mind". A Last Will and Testament outlines your wishes about the distribution of your property after death, but testamentary documents such as wills usually require probate. In preparing only a will, you may be forcing your loved ones through months, even years, of agony in the probate court. In some states, probate can take 10% of your GROSS estate.

Learn everything you need to know about creating an estate plan and protecting your families assets by Downloading the Estate Planning Package.