Figuring out how to plan your estate can be a big job. Here are some common questions and answer that may help you.

What is an estate plan?

An estate plan is a systematic plan for the accumulation, conservation and distribution of an estate. A good estate plan minimizes taxes and accomplishes the owner’s goals efficiently and effectively. When the owner dies, the estate plan distributes the estate with minimum administrative costs. The sooner an estate plan is made, the more effective it can be.

Should I have a will if I don’t have children?

Everyone should have a will, including you and your spouse. Believing that everything the two of you own will pass automatically to the surviving spouse when one of you dies is a risky proposition. Your property could be distributed according to the state’s inheritance laws instead of going directly to the surviving spouse.

Should I set up a trust, or do I even need one?

It depends on the size of your estate and the purpose of the trust. If your estate is under the current estate tax exemption amount ($2 million for 2006 through 2008, and $3.5 million for 2009) and small enough to qualify for quick and inexpensive probate in your state, you might not need one. However, a trust can help you avoid a court hearing if you become incompetent or unable to provide for yourself, or if you want to provide for grandchildren, minor children, or disabled relatives. What happens to my 401(k) account when I die? If you designated beneficiaries when you signed up for a 401(k) account, they receive the money in your account when you die. Otherwise, your estate automatically becomes the beneficiary. If your beneficiary is your spouse, he or she has most of the same options that you would have if you were leaving your company to take another job.

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