What, exactly, is your estate? The answer to this question is not always obvious to people who don’t have any direct experience with, or background in, the estate planning field. Because of this, there are often some significant misconception about what an estate is and what estate plans are designed to do. To help clarify the most basic and important of issues, let’s take a look at your estate, what it is, and why it is so important.
What do lawyers mean when they refer to your estate?
In popular circles, the term “estate” is often used to describe a large piece of property, or a large home. For example, someone who owns a large piece of property with a home on it might refer to it as their estate. And while this description is accurate in day-to-day conversation, it doesn’t hold the same meaning as when an attorney refers to an estate.
In estate planning, an estate is the collection of property or legal issues a person leave behind after that person either dies or becomes incapacitated. In other words, everyone has, or will have, an estate. Whether you own very little or a lot, you have an estate whether you realize it or not.
Why do I need to plan for my estate?
Deceased and incapacitated people cannot express their wishes. The law, however, allows people to make certain types of choices wile they are still capable that will apply to the property and interests they leave behind after they die or lose the ability to make decisions. These types of choices, and the tools you create to make them, are what estate planning is all about.
In a nutshell, estate planning is simply a process in which you make choices about what you want to happen to your estate in the future. If you become incapacitated, who would you want to manage your property for you? How do you want to distribute that property as inheritances after you die?
All of these types of questions lie at the heart of estate planning, because all of them address what happens to your estate in the future.
Is an estate only comprised of property?
No. Though property concerns do play a key role in estate planning, your estate will also include other issues that are just as important. For example, if you are the parent of a young child, your estate plan will allow you to name a guardian who will take over caring for that child once you are no longer able to do so. Your child is not property, and neither is the right to care for the child, but addressing the issues is nevertheless a key element of your estate plan.
Parman & Easterday
- Five Things You Need to Know About Medicaid Planning - July 27, 2021
- Debunking Four Estate Planning Myths - July 22, 2021
- These Two Bills Would Broaden Taxes on Inheritances - July 20, 2021