Estate Planning 101: Terms You Need to Know
Taking the time to sit down and plan your estate is one of the wisest decisions you can make in life. Strategic estate planning distributes your wealth, businesses, properties and other assets to your loved ones after you die while helping them avoid unnecessary taxes, fees and lengthy wait times.
Estate planning may seem simple enough, but you should be mindful of the many pitfalls along the way. Details are crucial, and without professional guidance, you could leave language ambiguous or otherwise create reasons to question your intent or your will’s validity. For example, there are countless stories of children who are unintentionally disinherited because of seemingly insignificant mistakes in a parent’s will, and they end up having to take costly legal action to resolve disputes and other issues.
So, what do you need to know when you’re creating an estate plan? First, you must keep in mind that there is no substitute for an experienced and trustworthy attorney (and financial planner) if you wish for your legacy to be intact and inherited by the people you love. Before meeting with your lawyer, familiarize yourself with the following terms so you understand the upcoming process more thoroughly:
- Probate — Probate is the process of legally validating a will. The two primary reasons that people wish to avoid probate are that it ties up property, sometimes for months, and that it can be expensive. A thoughtful estate plan can avoid probate altogether. On the other hand, in New Jersey the probate process is not too complicated, and it might be easier and cheaper to actually not avoid probate. Everyone’s estate plan is unique, and it’s important to consult an attorney to discuss your options.
- Will — Your will contains your last wishes for your property and assets after you die. In New Jersey, if you die without a will, your belongings are divided and distributed according to the state’s intestacy laws. In addition to specifying to whom you wish to leave your possessions, your will can name a guardian for your children, a trusted person to manage the property you leave to your children and an executor to your estate.
- Executor — An executor is a person you designate to manage your estate through probate. Your executor distributes your assets to the beneficiaries you have named in your will. Among additional responsibilities, he or she pays all outstanding bills due at your death and settles any lingering debts.
- Testator — A testator is the writer of a will.
- Trustee — If you create a trust as part of your estate plan, you will need to name a trustee to look after the property held within the trust. A trustee is responsible for maintaining the property in a trust for the beneficiaries of the trust.
- Advance directives — Most documents in an estate plan relate to what happens after your death. Advance directives, on the other hand, address who should manage your finances and medical care should you remain alive but suffer physical or mental incapacity. Advance healthcare directives also allow you to make decisions before the point of incapacity, so your loved ones are not left wondering how best to respect your wishes.
The terms listed above should help you understand the basic process of planning your estate. But you still need an attorney who can execute your plan effectively. Seek advice from Alec Borenstein, Esq., at firstname.lastname@example.org or call 9082366457 to learn more.