Estate planning is one of the most important steps to ensure your loved ones are taken care of after you die. But it can also be confusing especially if this is your first time doing it. It’s essential to understand the basics of estate planning before you jump into the process.
What is an estate?
An estate is the total of all property, possessions, and investments you own, either in your name or jointly with another person. This includes real estate, vehicles, bank accounts, stocks and bonds, life insurance policies and personal items, such as jewelry. It also includes debt, such as current bills, credit cards, mortgages, and loans. Certain property, such as life insurance or accounts with beneficiary designations, do not typically pass through your estate.
What is estate planning?
Estate planning is the process of making a plan for what will happen to your assets and possessions after you die. It involves deciding who will receive your assets and how, determining how much of your estate will go to taxes, creating a trust if appropriate to manage the distribution of assets, and naming an executor or personal representative responsible for carrying out your wishes.
Creating a will
A will is a formal document that explains how your assets will be distributed upon your death. This can include who will receive certain pieces of property, or which family members or charities to whom you would like to leave money or other assets. You should also name a personal representative of the estate responsible for handling its distribution and carrying out any instructions stated in the will.
Estate planning gives you peace of mind by ensuring that your wishes are carried out after you die and that the taxes on your estate are minimized. It also allows you to name beneficiaries for any accounts or property, so they don’t have to go through probate court. Without proper estate planning, state laws may decide who receives your assets, potentially leaving out people you wish to inherit them. You should consult with an experienced estate planning attorney in Pennsylvania to help guide you through this process.