An estate is composed of everything the individual has rights to. This can include property, business interests, investments, joint ownership, life insurance owned by the individual (and those gifted within three years of death), retirement benefits, possessions, and any other personal assets.
An estate plan can be thought of as a portal. When an individual passes away, all of their assets must pass through this portal. First they will pass through the probate or non-probate filter. They will then pass through multiple other filters (the non-probate journey being much shorter) before the remainder finally reaches the desired individual or entity.
The purpose of an estate plan is to pass as much as the estate as possible to the desired individual or entity with as little trouble as possible.
Some basic estate planning tools: will, power of attorney, letter of last instruction, codicil (will provision), joint ownership considerations, lifetime gifts and trusts. Also to consider are durable power of attorney and durable power of attorney for health care in case of incapacitation. While not all are applicable in all cases, become familiar with their purpose. As time passes, assets grow and circumstances change. The necessity of other tools and provisions may become apparent.
During the estate planning process, professional council should be sought from both an attorney and a financial professional who specializes in estate planning. Estate laws can vary significantly from state to state. For example, the definition of probate assets and non-probate assets will vary from state to state depending on whether the state is a common law state or a community property state. Situations with assets in multiple states can further complicate the situation. These situations are easily manageable with the appropriate professional assistance.