A rundown of estate planning and what you should know
Nobody wants to think about passing away. However, when you become a certain age, it’s important to start considering what to do with your belongings. Whether you want your property to go to your descendants or other close friends and relatives is entirely up to you. In order to make sure that everything goes where it’s intended, though, you need to go through a series of legal processes. It’s not simply “please give all my property to ‘x’.” Depending on the route you take, these processes could get somewhat expensive and technical. As your local insurance agent, we thought we’d take some time to go over the estate planning process and what your options are for passing on your property. Today’s post is only a very brief and uncomplicated outline of some of the keywords surrounding estate planning, so make sure to call AmeriQuote Insurance before going ahead with the process.
What Qualifies as an Estate
An estate is simply everything that belongs to you and that’s in your name at that time of passing. Your estate includes all of your tangible belongings, or everything you can physically touch, such as jewelry, a house, clothing, cars, artwork, and other printed documents. It also includes intangible belongings, like bank accounts, retirement funds, some life insurance policies, copyrights, and stock options. When considering your estate and your plans for it, it’s important to make sure that you account for everything that you own, ensuring that it goes into the right hands.
Benefactor and Beneficiary
There are approximately two parties in the estate planning process: the benefactor and the beneficiary. The benefactor is the one doing the estate planning and choosing the direction of his or her belongings. The beneficiary, on the other hand, is the one who receives the estate. In the case of most intangible property, it’s important that the beneficiary and the benefactor have a mutual understanding of how to handle what’s been passed down. For example, if stocks are passed down, it’s important that the benefactor knows how to handle this property and any taxes and rules surrounding it.
Will vs Living Trust
Two of the most prominent forms of passing on your estate includes a will and a living trust. Both of these methods have pros and cons. Depending on the situations of the benefactor and beneficiary, one method might be more beneficial to consider. The biggest difference between the two is that a living trust is where your estate is “shared” while you’re still alive, while with a will, your property is passed on post-death. In a living trust, you give power over the entirety, or certain parts, of your estate to your beneficiary, so that when you pass, it doesn’t have to go through a legal system or probate. Conversely, a will is written before death and the property is distributed post-mortem. After death, the will must go through probate, which is a legal system that verifies the will and distributes the property accordingly. Each method is taxed differently, so it’s important to talk to your life insurance agent before choosing one.
Thank you for reading. For assistance with estate planning, call your local life insurance company, AmeriQuote Insurance in Fort Collins, for assistance!