Last Will and Testament
The most basic estate planning tool is a Last Will and Testament.
Everybody has a will. You either prepare your own will or one has been written for you by your state legislature (this is called the intestate law, and describes who will handle your estate and who will receive your assets if you should die without providing your own written instructions in your own will). You have a choice to either prepare your own plan for the distribution of your assets, or rely on your state legislature to prepare your will.
ALL wills must go through a legal process called “probate” to distribute your estate to your heirs — unless your estate falls under one of the 3 exceptions. These exceptions are:
First – to have spent all your money while still alive.
Second – to have an estate valued at less than the amount requiring probate in your state of residence (for example: if you reside in Arizona and the value of the assets you own is less than $75,000, no formal probate is required upon your death. Your assets may be transferred to your heirs by an affidavit).
Third – have nothing in your name at the time of your death. The best way to have nothing in your name at the time of your death is to set up a revocable living trust.