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What exactly is an "estate"?

When Michigan residents hear the term "estate plan," some may think of it as a legal term applying only to wealthy people. On the same token, people might think of an estate plan as a stack of documents that directs the distribution of enormous amounts of assets and property. However, what these same people may not know is that drawing up a document as simple as a will is the beginning of virtually every estate planning process.

So what is an "estate"? Believe it or not, almost everyone leaves an estate when they die, regardless of whether the proper documents have been prepared for the distribution of property. Some readers may not think of their bank accounts, houses, retirement accounts and personal property as their estate -- but that is exactly what those items are. And drawing up the correct documents to determine the distribution of these assets to relatives or other heirs is the best way to ease the burden left to family members after the estate owner's death.

So if an estate consists of everything a person leaves behind, what happens if a person doesn't have an estate plan? Well, in such a case, the person is said to have died "intestate" -- without a will. When this happens, state laws apply to determine how an individual's estate distribution is to proceed. In Michigan, extremely important decisions are left to a plan constructed by the legislature -- and the results of that plan may not come anywhere close to what the estate owner or the heirs would find desirable.

In short, having an estate plan is essential for almost everyone. It doesn't matter if the person is single, married, divorced, old or young -- if an estate distribution plan is not recorded prior to death, there is no way that a person is able to influence the distribution of individual assets. And when there is no plan, the possibility of probate litigation only increases.

Source: Forbes, "'I Don't Have An Estate. Why Do I Need An Estate Plan?'" Deborah L. Jacobs, June 26, 2012

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