A person who’s creating an initial estate plan needs to ensure that it meets their current needs. As you’re working to get everything in order you’ll come across some very specific terms.
Learning some of the more common terms can help you to understand things. Even if you already have your estate plan created, these might help you as you review it or update it. Here are some terms you might come across:
A person who doesn’t have a will at the time of their death is said to die “intestate.” This means that state laws will dictate how their assets are distributed. The intestate succession laws might not align with your wishes.
Revocable and irrevocable trusts
A revocable trust is one that you can change or cancel while you’re still alive. An irrevocable trust can’t be canceled or altered. The revocable trust is more flexible, but the irrevocable trust offers some protection from creditor claims.
Powers of attorney
A power of attorney gives someone else the legal ability to make decisions for you. Commonly, powers of attorney usually entail either health care or financial decisions, depending on how the document is set up.
The payable-on-death designation has to do with financial accounts. The funds in those are handled according to the payable on death designation you set for them. They shouldn’t be placed in the will or trusts.
You should get your estate plan together as quickly as possible. This can give you peace of mind because you’ll know that your estate will be distributed in your intended manner. Just remember to review the estate plan periodically so you can ensure that it continues to meet your needs.