Many people make estate plans. An estate plan helps people instruct how their assets are distributed after they pass away.
Here are a few common questions you may need to ask as you proceed through the estate planning process.
1. What is an heir and beneficiary?
A beneficiary is someone named will to gain from the deceased’s estate. Anyone can be a beneficiary. A primary beneficiary can be named to gain assets first, followed by secondary and residuary beneficiaries.
If there is no valid will, then the testator would die intestate. Heirs benefit from an estate if someone dies intestate because they are the people who legally stand to inherit when there’s no will. Typically, this means a spouse will inherit from an estate, followed by children, parents, siblings and extended family.
2. Is a trust and will the same?
A will is a common legal document made in an estate plan. The testator outlines what assets are distributed to whom in a will. Wills are often subjected to probate and estate taxes.
A trust allows a grantor to give assets to a trustee. The trustee is responsible for distributing assets at an appropriate time. Not only can a trust circumvent probate and estate taxes but grantors have a choice of trusts, each with unique wording. For example, a pet trust could give assets for the care of a dog or cat after the grantor passes away.
3. How often should you update your estate plan?
Many people make their estate plans and never touch them again. People may need to consider updating their estate plans every few years. This is so that new assets and important decisions are included or excluded. For instance, someone may have added their spouse to their will during a marriage but needs to remove them after a divorce.
It may help to learn about your legal options before planning your estate.
