The term estate planning refers to the preparation of tasks that serve to manage an individual's financial situation in the event of their incapacitation or death. The planning includes the bequest of assets to heirs and the settlement of estate taxes and debts, along with other considerations like the guardianship of minors and pets. Most estate plans are set up with the help of an attorney experienced in estate law. Some of the steps included in estate planning typically include listing assets and debts, reviewing accounts, and the writing of wills.
KEY TAKEAWAYS
- Estate planning involves determining how an individual’s assets will be preserved, managed, and distributed after death or in the event they become incapacitated.
- Estate planning tasks include making a will, setting up trusts and/or making charitable donations to limit estate taxes, naming an executor and beneficiaries, and setting up funeral arrangements.
- A will is a legal document that provides instructions on how an individual’s property and custody of minor children (if any) should be handled after death.
- Various strategies can be used to limit taxes on an estate, from creating trusts to making charitable donations.
- Estate planning can and should be used by anyone—not just the ultra-wealthy.
