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Guest Feature: What Exactly is an Estate Plan?

By Jennifer Jackson Bell*

Stated in the simplest terms, estate planning is the practice of preparing for a person’s eventual demise. As morbid as it may seem to think about your death, planning for the end or rather what will happen to your belongings or loved ones afterwards is an important yet most-often complicated task. This is why hiring an Estate Planning attorney is paramount and also, very beneficial. An attorney will be knowledgeable of the current tax law governing gifts, estates and transfers. With the help of an attorney you can minimize the taxes your loved ones will face after your death.

A more inclusive definition of Estate Planning is the process of anticipating and arranging, during a person’s life, for the management and disposal of that person’s estate during their life and at and after their death. An estate is the worth of a person. In essence it is the sum of a person’s assets minus any liabilities. Assets can include: real estate, jewelry, cash, vehicles, equipment, antiques, life insurance policies, etc. Basically an asset is anything of value. Liabilities can include: credit card debts, mortgages, tax debt, child support, etc. Liabilities are things for which you are responsible, principally financial obligations. Leaving your loved ones with items from your estate is more complex than it may seem, especially when it comes to the applicable tax law.

You may be thinking, but I don’t need an estate plan, I’m not rich! Don’t make the mistake of overlooking your assets because you don’t think you have much or any for that matter. An estate plan is an important financial document for everyone to have. With only a few exceptions, everyone has an estate. If you own something of value and you would like to leave it to someone or some place after your death, you have an estate. And whether you know it or not, you also have an estate plan, but one you had no control over or decisions about. North Carolina has made one for you; actually they have one for every person that does not put an estate plan into place of their own. When a person dies without an estate plan, probate governs how their estate will be dispersed. Probate is a court-supervised process that gathers a person’s assets and distributes them to creditors first then inheritors in a precise manner based upon specific legal statutes. Basically, if your estate goes to probate without an estate plan in place, there are specific rules that cannot be avoided on how your valuables will be handed out. This is why having an estate plan is extremely important. You should have a say in how your affairs are handled, even after your death.

A basic estate plan includes a will and/or trust. A will is a personal declaration of your intentions about the disposition of your valuables after your death. Trusts involve the transfer of your, the grantor, valuables to an individual, the trustee, who manages these assets for the benefit of one or more others, the beneficiaries. Wills and Trusts can be particularly convoluted, which is why it is always important to consult an attorney before beginning to prepare either.

* Ms. Bell is a third-year law student at the Norman Adrian Wiggins School of Law at Campbell University. She is originally from Eastern North Carolina and intends to practice law in the area of wills and estates upon completion of her third year in law school and the State Bar exam in North Carolina. © 2017.

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