Estate planning is the process of making legal arrangements to ensure that the wealth you've worked hard to build over your lifetime can be passed on to your loved ones in the most efficient and tax-advantageous way possible.

 

Let’s take Mr. Zhang (a fictional name) as an example. In the event that Mr. Zhang passes away or becomes incapacitated, the individuals he has designated will be responsible for taking care of him, his children, and his assets. Estate planning also includes deciding who will inherit his estate, how they will inherit it—whether outright as individuals or through a trust. These important decisions should be made with the guidance of an experienced attorney, who can help weigh the pros and cons of each option.

 

If you do not currently have a will or trust in place, then the laws of your state (for example, New York) will make those decisions for you by default. Every state has a set of rules that determines how your family and assets will be handled if you become incapacitated or pass away. However, these default rules often do not reflect your personal wishes. The only way to ensure that your assets are distributed—and your loved ones are cared for—according to your intentions is to create a will or trust ahead of time.