Estate Planning Basics: Wills, Trusts and Estates
Updated: Jul 16, 2020
About fifty-five percent of American adults do not have a last will and testament or other estate plan. There are plenty of reasons why Americans tend to put estate planning on life’s back burner. For some, contemplating one’s own mortality can be uncomfortable. For others, their own mortality may seem far off or unrealistic. Whatever the reasoning, a general misunderstanding of estate planning seems to influence the overall lack of action.
Because estate planning typically considers one’s assets and finances, some tend to believe that estate planning is only necessary for people with especially high net worth. However, estate planning should be considered by anyone who owns property or financial assets, as well as by anyone with minor or young adult children. A person’s overall net worth could impact the type of estate plan, but it does not control whether planning needs to be done.
Below is a brief explanation of estate planning. Hopefully it will give you a better understanding of why estate planning is necessary and what to expect when developing your own plan.
I. What is an Estate?
An “estate” broadly refers to all of the assets a person owns. An estate becomes a legal entity when the asset owner passes away and the court supervised probate process begins. The probate court supervises the process of paying the deceased person’s debts and distributing their remaining property to surviving family members or as directed by their estate plan. Many assets can smoothly pass ownership outside of the probate process if an estate plan is in place.
II. What is Estate Planning?
Estate planning is arranging a person’s assets in order to carry out their wishes upon death. The goal of an estate plan depends on individual circumstances. However, a common goal is to have property pass to surviving family members without going through the probate process, thereby saving time, money, and extra stress. Other common goals include providing for the financial well-being of loved ones, naming guardians for minor children, or maintaining a degree of control over a child’s finances until they reach a particular stage in life. In the absence of an estate plan, a deceased person’s assets pass to their surviving heirs according to Ohio’s law of descent and distribution through the probate process.
III. What Documents are Included in Estate Planning?
The documents needed to establish an estate plan depends on individual needs and desires. While the last will and testament is the document most commonly associated with estate planning, other documents could be necessary as well. Such other documents could include deeds, trusts, powers of attorney, healthcare directives, transfer on death affidavits, and private contracts.
An estate plan that fits your needs depends on your own familial circumstances, the type and extent of assets you own, as well as your personal desires. Taking the time to choose an attorney and develop a plan that suits your unique needs can provide you and your loved ones with peace of mind.
Jim Gilbride is located in Tallmadge, Ohio. His primary practice areas are estate planning, small business counsel, and small PD counsel. You can reach Jim to discuss your estate planning needs by clicking below.