Estate planning can be a overwhelming to many, but the more you learn about it, the less intimidating it becomes. Having an adequate estate plan is the best way to protect your family and preserve your legacy, and the best way to set up an estate plan is to meet with an experienced estate planning attorney. Having an understanding of some of the common terms can be extremely helpful before meeting with your attorney.
Beneficiaries are family, friends, or charities that are named in a will, trust or as a beneficiary of your estate. In most cases, you can change your estate plan as often as you’d like so no one officially becomes a beneficiary until after you die.
Codicils are amendments or additions to your Will. You can always create a new will which will supersede your previous one, however, if you only need to make a small change like replacing a beneficiary or executor, a codicil can be used to make that small change without invalidating the will.
In contract writing, people who have passed away are referred to as decedents. In estate planning, the decedent is the owner of the insurance plan, policy, Will, Trust, or account, the person leaving assets to other individuals.
The term intestate describes people who die without a Will or any estate planning documents. If you pass away intestate, it means you did not leave guidelines on how you want your estate distributed. In this situation, Pennsylvania law sets out who will receive your property.
A Trust is a legally binding estate planning document involving beneficiaries, a Grantor, and a Trustee. The Grantor is the person who sets up the trust and puts their own property into the trust, the Trustee is the person named to take care of the property and make any distributions to beneficaries. Trustees can often be the Grantor, a friend or relative, or an independent professional such as an attorney, CPA, bank, or trust company. Think of a trust like a “bucket” that you put property into (cash, investments, realestate). Once the property is in the “bucket” the Trustee who is chosen by the Grantor can manage the property according to the instructions created by the Grantor. There are different kinds of Trusts, some are revocable which means they can be changed or revoked all together, some are irrevocable which means they cannot be changed—deciding which one to set up will depend on your estate’s size and your goals.
Irrevocable vs Revocable
An irrevocable Trust means your documents cannot be easily modified or dissolved. A party that wants to change the contents of this type of document would need to seek approval from the beneficiaries. At times, people create irrevocable Trusts to protect their assets. Meanwhile, a revocable Trust is one that you can easily alter.
A joint tenancy of a property means you co-own it with another party. Having a jointly-owned property can cause complications during succession. Knowing how to title property or hiring an estate lawyer to do this for you will prevent these issues and save your beneficiaries from having to tie up loose ends when the time comes.
The legal process of filing the will with the courts, appointing a representative of the estate (executor) and collecting and distributing property is called probate. It involves paying off the estate’s debts and distributing property to beneficiaries. Probate can be time-consuming, costly, and complicated, and the developments will most likely be public. When you set up your estate plan well, you can reduce how complex it will get—at times, your beneficiaries might even be able to avoid it altogether.
A Will is a document detailing how you want your assets and properties distributed in the event of your passing. It also lets you name legal guardians for minor children or dependents and specify your wishes for final arrangements. If you aren’t ready to set up an estate plan, you should at least have a valid Will prepared.
Know the Basics of Estate Planning
Estate planning involves many factors such as who can act for you if you are injured or ill (Power of Attorney), who will care for your minor children, and what will happen to your property after you die. Estate planning does not just deal with your stuff after you die, so it is important for everyone to have an estate plan, no matter your age or how much money you have.
Cherewka Law is your partner in giving what you own to whom and when you want, the way you want to give. Our estate lawyers specialize in creating customized plans, and we serve the Cumberland County, PA, Dauphin County, PA, and Lancaster, PA, areas. Read our estate planning guide or book a consultation call today!