When I would tell people that I was working on a book about estate planning, many of them looked at me quizzically because they weren’t sure what I meant. Others said, “Oh, that’s not something I need, because I don’t have an estate.”
Contrary to popular misconception, you don’t have to own a big house to have an estate. Your estate consists of everything you own when you die, including your home, personal property, investments, bank accounts, retirement plans and any interests in a family business or partnership. Beneficiary designation forms control who gets retirement accounts, along with life insurance proceeds. For most other assets, you need a will or living trust that says who gets your stuff.
If you die without a will or living trust (“intestate,” in legalese), state law will determine how most of your belongings are distributed, and the result may not be what you would want. These laws establish a ranking of inheritors. Some newer laws say everything will go first to the spouse, then to children, parents and siblings.