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What is an Estate Plan and Why Do You Need One?

What is an Estate Plan and Why Do You Need One?

At American National Bank & Trust Company, we are pleased to offer comprehensive estate planning services to our clients, helping to ensure that their legacy is protected and their loved ones and beneficiaries receive the full benefit of their hard-earned wealth. In this post we’ll answer your basic questions about estate plans to help you learn more about this important process and its purpose.


What is an estate plan?

When you make an estate plan, you create a comprehensive legal strategy that lays out details for how to manage and distribute your assets upon death. An estate plan is often centered around a will which outlines how the person’s property and possessions should be distributed among heirs or beneficiaries. Additionally, as part of their estate plan, individuals sometimes establish trusts to safeguard and distribute assets according to specific instructions. Other possible components include powers of attorney, healthcare directives, adding beneficiaries to accounts (like IRAs and other retirement accounts), and provisions designed to minimize heirs’ tax liabilities and avoid probate.

Estate planning is often left to the final years of one’s life, but delaying estate planning can create complications in the event of an untimely death or cognitive decline—common in individuals over age 65. Because it’s easy to update an estate plan regularly, creating your plan earlier in life (and before your assets grow and become more complicated), can make the process more manageable and help your loved ones avoid the pitfalls of an unprepared estate.


Who is involved in the estate planning process?

The estate planning process typically involves several core participants, including:

  • Testator: The person who is planning for their estate.
  • Attorney: A legal professional who can help individuals navigate complex laws and ensure that the estate plan is legally sound, drafting documents such as wills and trusts based on the individual’s wishes.
  • Financial Planner/Estate Planning Professional: A financial professional who helps to organize and optimize the financial aspects of the estate, including investment strategies and tax planning. These individuals can often also provide trust services.
  • Executor: A person (either an attorney or trusted family member) who is appointed to carry out the instructions in the will and manage the distribution of assets, as well as handle legal and financial matters and paying debts.
  • Heirs and Beneficiaries: Individuals designated by the testator to inherit assets according to the terms outlined in the estate plan. They may include family members, friends, or charitable organizations.

Depending on the estate plan specifics, you may also have a trustee (individual appointed to manage and distribute assets in a trust), a healthcare proxy (individual appointed to make medical decisions on behalf of the testator if they become incapacitated), and guardians (individuals appointed to take care of minor children).


Why do you need an estate plan?

Estate plans aren’t just designed to ensure that your assets are distributed according to your wishes. They can help your heirs avoid excessive taxes, make the settlement of the estate swift and simple to avoid familial strife and unnecessary delays, guarantee proper care for minor children, safeguard assets for healthcare needs, and facilitate complex end-of-life care and decisions.

Estates that are settled without a plan can create unneeded stress and burdens on family members during times of grief—something many individuals hope to spare their loved ones from.


Ready to begin the process?

We’re here to help. Visit your local branch to learn more, or make an appointment with a member of our experienced wealth management team today.