The term “estate” refers to all property that you own when you die, including without limitation, your home and real estate, land, your business assets (if in your name), tangible personal property (such as your automobile, jewelry, precious metals, heirlooms, furniture, and other physical assets), your intangible personal property (such as your bank accounts, insurance, bonds, stocks, social security benefits and pension), and anything else you may own.
An estate plan is a plan to account for your wishes during and after your lifetime, while also attempting to avoid certain common problems that come with the end of life. Estate planning typically involves a set of documents that work together to achieve your objectives.
It is helpful to think of your estate plan as the blueprint for the timing, allocation, and distribution of your assets and care for your family members. However, an estate plan can begin while you are alive and can and should address matters other than just the distribution of property.
An estate plan may also address your medical care (under a Medical Power of Attorney and a Living Will) and control of your property (under a Power of Attorney for Property) if you become incapacitated. EPM’s estate planning packages all include medical and financial powers of attorney.
If an individual has children, his or her estate plan can and should account for the guardianship of minority children. Guardianship can be under certain specified situations or triggering events. EPM’s estate planning packages allow the user to address guardianship of minor children.
It is strongly recommended that all adults have an estate plan in some form or another. An estate plan is not just for the sick and elderly. Regardless of your age and stage of life, estate planning is an important part of your financial plan, and this should be adjusted as you experience major life changes.
Your property will need to be distributed when you die. In most situations, if you die without a will or other legally enforceable estate plan (subject to certain other considerations, such as if the property is distributed per other regulatory requirements or common law rules applicable to property, such as joint tenancy), your property will be distributed according to your state’s "intestacy" laws. See What is Intestacy and How does it Work? For more information.
Intestacy is the law that applies to property in a deceased individual’s estate that is not given away through other legal means (such as through a valid will or trust).
In general, intestacy law gives the deceased individual’s property to his or her closest relatives, beginning with the person’s spouse and children. If the deceased individual had neither a spouse nor children, that person’s living grandchildren or parents would receive get the deceased person’s property (the order of priority for property distribution being determined by state law). This list continues with increasingly distant relatives, including siblings, grandparents, aunts and uncles, cousins, and the deceased person’s spouse's relatives. If the court exhausts this list to find that the deceased individual has no living relatives by blood or marriage, the state will receive the property.
Under intestacy law, property is given away in an order specified by state law. The deceased individuals intentions and preferences are not taken into consideration.
This default system could mean that your property may be more likely to end up in the hands of someone you do not want inheriting your property. Intestacy law does not
There is also a strong possibility that family members may end up in conflict with one another over the court’s allocation of your assets. Although internal conflict among surviving family members is possible under even the best of estate plans, dying without a valid estate plan invites conflict after your death.
No. Taxes can be one consideration addressed through an estate plan, but unless an individual is wealthy (either currently or may be wealthy in the future), taxes are not generally the primary matter addressed through estate planning. For more information, see the free article on Taxes and Estate Planning.
Intestate law is the set of default rules under state law that apply for the allocation of someone’s assets after death if the assets are otherwise legally given away by another form or transfer (such as a will or joint tenancy). A Last Will and Testament (which can be used in combination with other estate planning instruments, such as a trust) allows a person to specify who receives what assets.
Estate planning puts you in the power position by enabling you to decide who gets what property, how much they receive (subject to certain legal requirements in the event of a surviving spouse), and when the property is distributed. Of course, there are other considerations and requirements such as taxes and debts that must be paid upon your death, but even given certain legal constraints that cannot be avoided, proper estate planning affords you far greater overall control of your asset distribution versus dying intestate.
For more information, see Wills 101, included in the free educational materials.
In America, you are generally free to dispose of your property as you see fit. However, as Christians, we believe we have a duty to steward our resources to further the Kingdom. An estate plan will enable you to gift your resources in line with your beliefs.