Expat Estate Planning
One thing that confuses many people about estate planning is the terminology. It is full of legalistic jargon. Some important terms are defined here.
Estate: The net worth of a person at the time of his or her death
- Will: A legal document outlining how a person wants his property divided after death.
- Executor: The person designated to make sure the provisions of a person’s will are followed and that other legal requirements are met.
- Bequests: Specific items of property that a person leaves to others in his will.
- Residual estate: Amount left over after expenses, taxes, and bequests.
- Beneficiaries: Persons receiving property identified in a will.
- Heirs: Persons who are entitled to receive property.
- Trust: A legal format by which some property is held for the benefit of designated beneficiaries. Trusts can be funded before or after death.
The first step in estate planning is to calculate the value of the assets and liabilities. Items that might be contained in an estate include items such as real estate, securities, and tangible personal property.
In addition, life insurance policies are also considered to be part of the estate, even if someone else has been designated as the beneficiary. It must be noted that anything that remains in retirement accounts, including pension death benefits, is also included as part of the estate.
Estate planning sounds complicated at first, and some people need complex estate plans. But simpler plans are often adequate for many people. Regardless of their complexity, however, all estate plans have two overall goals:
- To specify how a person wants his estate divided after his death. In other words, who is going to get what property. One can even set up his estate plan in such a way that his heirs receive some of his property before he dies.
- To specify who will care for minors (children) until they reach the age of majority. An implication of this is that even young parents need some type of estate planning.