What is estate planning?
Effective estate planning means developing a plan that will achieve your goals as the estate owner while you're alive and after your death. It's an ongoing process that involves the creation, conservation, and distribution of property.
An estate plan can be as simple as having a will and life insurance, or it could use trusts, business continuation plans, charitable arrangements, and other elements.
What goals can an estate plan address?
What does the estate planning process involve?
The estate planning process involves organizing and managing your assets and affairs to ensure your wishes are carried out after your death or in the event you become incapacitated. Here's a general overview of the typical steps involved:
- Assess Your Assets and Liabilities
- Make a detailed list of your assets (property, investments, bank accounts, personal belongings) and liabilities (debts, loans).
- Define Your Goals and Wishes
- Determine how you want your assets distributed.
- Decide on guardianship for minor children, if applicable.
- Consider any charitable giving or special bequests.
- Choose Key Individuals
- Executor or personal representative: person who will manage your estate.
- Trustee: if you create a trust, the person or institution that will manage it.
- Guardian for minor children or dependents.
- Power of attorney for financial and healthcare decisions.
- Create Legal Documents
- Will: Specifies how your assets will be distributed and names guardians for minors.
- Trusts: Help manage assets during your life and after death, can avoid probate.
- Durable Power of Attorney: Authorizes someone to handle financial matters if you’re incapacitated.
- Healthcare Directive (Living Will): Specifies your medical care preferences.
- Beneficiary Designations: Ensure accounts like retirement plans or insurance have up-to-date beneficiaries.
- Plan for Taxes and Expenses
- Consider estate taxes, inheritance taxes, and how to pay debts and expenses.
- Strategies might include trusts or gifting.
- Organize and Store Documents
- Keep your estate planning documents in a safe but accessible place.
- Inform trusted individuals where these documents are stored.
- Review and Update Regularly
- Life changes such as marriage, divorce, birth, death, or changes in assets require updates to your plan.
- Review your estate plan every few years or after major life events.
- Consult Professionals
- Work with an estate planning attorney to ensure legal compliance and that your documents reflect your wishes.
- Financial advisors and tax professionals can help optimize your plan.
- An insurance agent can provide life insurance options that may help meet your estate planning needs and goals.
This process helps provide peace of mind that your affairs will be handled according to your intentions.
Disclosure
Neither State Farm® nor its agents provide tax or legal advice.
State Farm Life Insurance Company (Not licensed in MA, NY or WI)
State Farm Life and Accident Assurance Company (Licensed in NY and WI)
Bloomington, IL
Each State Farm insurer has sole financial responsibility for its own products.
IL-28.9