Illinois Bank & Trust : What’s an Estate Plan and Do You Need One?

It’s not a fun conversation to think about, but it’s important to consider what will happen to your wealth when you pass. Experts from Illinois Bank & Trust explain one way to make sure you’re prepared.

By Illinois Bank & Trust (Sponsored Content)

An estate plan is a series of legal documents that dictate how your assets will be managed during your life in the event of incapacity and how they’re to be disposed of after your death. Estate planning is the process of making those decisions for the management and disposal of your estate and drafting the legal documents to effectuate your plan. Your estate consists of all the property you own, such as cash, cars, real estate, land, retirement, investment and savings accounts, clothes, jewelry and other personal property.

The key advantage of having an estate plan is the power to decide for yourself how you want your estate to be administered. While you’re alive, you’re in control of choosing who inherits your estate, what they’ll receive and how they’ll receive it. You can create your estate plan in a way that minimizes or possibly eliminates the probate process (a public court proceeding), which can be costly, lengthy and lacking in privacy. You can also create your estate plan in a way that minimizes gift, estate and income tax for your beneficiaries.

Do I Need an Estate Plan?

Yes, individuals of every age should have an estate plan that fits their current situation. A single 20-something or 30-year-old just starting their career may only need a simple will and power of attorney designations, whereas an older, established professional or retiree may also need a revocable trust, life insurance or beneficiary designations, among other things. The more complex your situation is (kids, multiple marriages, blended families, businesses, wealth, charitable intent, etc.) the more complex your estate plan may need to be. Your estate plan will look different and evolve throughout your lifetime, depending on your family and financial situation. It also should be periodically reviewed and revised whenever significant life changes occur, such as the birth or death of a family member, an increase or decrease in your wealth, or a change in marital status.

It’s important to talk to and collectively work with your trusted advisors, such as your attorney, tax preparer and financial advisor when drafting your estate plan. You want to make sure your intent is clear; you’ve planned the administration of your estate in the most advantageous manner for your beneficiaries; and your estate planning documents work harmoniously together.

To help unburden your loved ones upon your death, you may also want to consider naming a corporate fiduciary, such as a bank or trust company, as the executor of your estate or successor trustee of your trust, should you need one. A corporate fiduciary, like Illinois Bank & Trust, will carry out your estate plan in an unbiased and impartial manner, providing you with the peace of mind that your estate plan will be fulfilled as you intended.

What Happens if I Don’t Have an Estate Plan?

If you don’t have a will, you’ll die “intestate.” When this happens, the intestacy laws of the state where you reside will determine how your estate will be distributed. Your loved ones will have no control over the distribution of your property, or who will care for your minor children (if you have any) and how they will be cared for.

The court, through the probate process, will make those decisions for you, and it might not be the way you would have wanted. And, depending on your situation and the type of assets in your estate upon your death, this could take years to resolve and result in costly fees and expenses.