Your estate is, in a nutshell, your net worth: everything you own and everything you owe. It is comprised of all of your property, including real estate, bank accounts, retirement accounts, personal belongings, vehicles, life insurance, business interests, intellectual property, and digital assets, and even social media accounts. It also includes your debts and liabilities, including tax liabilities.

A complete estate plan includes a will, living trust (if appropriate for you), powers of attorney, and other accompanying documents, which provide for the management of your property and healthcare decisions in the event of your incapacity, and which provide for the payment of your debts and distribution of property upon your death.

- Avoids probate, saving time, money, tension among family members, and uncertainty

- Provides for your care in the event you are incapacitated

- Keeps you in control of your affairs and your estate

- Provides clear instructions and your wishes

- Provides peace of mind to you and your loved ones

- Avoids the accidental disinheriting of certain family members

- Protects your privacy

- Allows your heirs to receive their inheritance quickly

- Can provide tax advantages

- Reduces the cost and increases the ease of property transfers

- Prevents a court from controlling who inherits your estate

- Allows you to provide instructions for your funeral and burial or cremation

- This deserves repeating: avoids probate!

A common misconception is that only a will is necessary to control and distribute your estate, but a will is not a sufficient estate plan.

First, a will alone will not necessarily avoid probate, which is a lengthy court procedure that is expensive and burdensome.

Second, a will only provides for the distribution of your assets upon your death. It does not provide for the event of your incapacity. A will cannot help your loved ones care for you and manage your estate when you are unable to do so yourself. This is the purpose of powers of attorney.

Third, a will does not protect your privacy or help you to reduce taxes the way that a trust can.

Probate is the legal procedure that takes place after you die, in which your debts and taxes are paid and your property is distributed to your heirs. The probate process requires an individual to file a petition in court to open your estate. If you have a will (intestacy), your administer (also referred to as an executor) will do this or will hire an attorney to do this on their behalf. If you do not have a will, then the court will appoint an administer.

Probate takes several months to over a year, and in some cases can take even longer. The administer must provide notice to all potential heirs and creditors, who can bring claims in the probate case, including challenges to your will. All claims and challenges will be decided by the court, and this can cause probate to drag on. Thus, your property may not be distributed to your heirs for a substantial period of time following your death.

If you have less than $100,000 in assets (including real estate), then you may be able to avoid probate through the filing of a Small Estate Affidavit. However, if you own property in excess of $100,000, then you should not delay in establishing a robust estate plan, which includes a living trust.

Probate cases are also opened in the event you are incapacitated and have not executed powers of attorney. Someone will need to petition the court for the ability to manage your affairs. Failing to execute powers of attorney while you are capable of doing so causes numerous issues.

First, because you have not designated who shall be your power of attorney, family members may disagree about who should be in charge, creating the potential that your loved ones will be fighting in court. This litigation is expensive and can be destructive to family relationships. Executing powers of attorney now will provide clarity to your loved ones and avoid the need for litigation.

Second, failing to designate powers of attorney strips you of control about who will manage your finances and make medical decisions for you. If you do not choose a power of attorney, then the court will appoint one for you, leaving this decision completely out of your control. Powers of attorney will give you peace of mind, knowing that the person or people you trust are taking care of you.

Third, a lack of powers of attorney will strip you of the ability to designate how you want decisions to be made. When you create a power of attorney for healthcare, you can provide clear instructions regarding medical decisions: life-saving measures, organ donation, the disposition of your remains, and any other limitations you may choose (for example, a ban on blood transfusions). For property powers of attorney, you can similar grant or limit specific powers. Without powers of attorney, these decisions are out of your control. Powers of attorney help you to retain control of your medical care and property, and also greatly assist your loved ones who are caring for you.

Finally, probate cases for incapacitated individuals are lengthy and expensive, because the case remains open until you either recover or pass away. It is normal to want to avoid the time, cost, and emotional effort of creating an estate plan, but failing to do so can cost you and your family so much more.

A trust is a legal arrangement in which a Grantor (the person who creates the trust, also sometimes called a Trustor or Settlor) gives a Trustee the right to hold title to the Grantor’s property for the benefit of the Beneficiary. There are many different kinds of trusts that can be created for a variety of purposes. The most common type of trust, and the one most frequently used in estate plans, is therevocable living trust.