Estate planning is designed to allow people to make their own choices about the future for themselves and their loved ones. You may think that an estate plan is only for the 1% of people, but the truth is everyone needs it. Regardless of your net worth, having a plan will cover your needs in case the unexpected happens.
Many people seem to spend more time planning their vacations. You seem to spend more time deciding who will inherit your legacy when you die than choosing which car to buy or even where to eat dinner. Thinking about booking a trip or reading restaurant reviews might not be very enjoyable, but without estate planning, you can’t choose who gets all the hard work you put into it.
According to the American Association of Retired Persons (AARP), more than half of American adults and 78% of millennials do not have basic estate planning documents such as a will or life trust. Unsurprisingly, young adults tend to postpone abortion plans until later. But even if you don’t yet have children or a large fortune, you can still benefit from going through the process now.
Here are the 8 reasons to have a estate plan:
Peace of Mind
Developing a comprehensive estate plan to manage your estate and support your loved ones after death is one of the most rewarding things you can do. You will feel a great sense of accomplishment when you complete your wealth planning.
Meet Your Needs
The estate planning process is essential because it allows you to identify your needs if you cannot meet them yourself. If you can’t manage your assets, a revocable trust can help you meet these requirements whether or not you’re around to manage your own holdings.
Distribution of Your Wealth
The most basic document in most probate plans is a will, which identifies an executor or personal representative responsible for administering your estate after your death and distributing it as you wish. If you have minor children, your will allows you to appoint a guardian to supervise the upbringing of your children. A revocable trust or estate memorandum may also be useful as a supplement to a will.
Some assets, such as life insurance, retirement accounts, and pensions, do not need to be included in a Last Will & Testament because the beneficiaries must be identified. However, these assets are often overlooked, so it is important to align their distribution with other assets.
To Avoid Ugly Family Infighting
Most of us have experienced, or at least heard of, the ugly family infighting that can occur after the death of a loved one. In addition to wasting time and money, not having comprehensive estate planning can take a toll on families, often leading to major breakups and damaged relationships. You make key decisions, such as who is responsible if you have a mental or physical disability, what, when, and how you can get to avoid family feuds and costly probate proceedings.
To Reduce Taxes
Maximizing wealth to beneficiaries and reducing transfer taxes can be an important part of the estate planning process. The Jobs and Tax Relief Act of 2017 expanded the amount individuals can contribute at death or while alive without imposing capital gains tax.
The new law increases the amount of the exemption through 2026 and provides several benefits, including portability which means spouses can share the exemption. In 2019, you can make tax-free contributions of up to $15,000 per year (twice that amount for couples). You can also pay for the medical and educational expenses of others without paying gift tax.
Avoid Probate
Avoiding probate is one of the most common reasons people seek the advice of an estate planning attorney. Anyone who has dealt with the stress, tension and expense of probate court knows that you want to avoid it at all costs. Inheritance is a painful process that happens after someone dies. It usually involves identifying and sorting out the deceased’s will or estate in court, evaluating that estate, allocating and repaying debts and taxes, and distributing the remainder of the estate.
As you can see, it is a very complex (and costly) process with many variables and possibilities for family problems, conflicts and conflicts. Typically, this process involves attorney and court fees paid by the estate, wasting money and resources that could otherwise go to the person’s beneficiaries. While many of the problems with this process may seem obvious, there are many more problems with the countless horror stories and news stories we’ve heard about Wills. Therefore, it is always best to consult an experienced attorney who can help you avoid these problems before they become a factor.
Protection of Beneficiaries
Estate planning is about more than deciding who to leave your stuff with; it’s about taking care of your loved ones while you’re away. Broadly speaking, there are two main reasons for protecting beneficiaries. First, the beneficiary may be a minor, in which case state law (and decency) requires that a probation officer or trustee be appointed to care for the minor’s needs and finances until the minor reaches the age of majority.
However, as we all know, in some cases adult beneficiaries also need protection, which is the second major reason people want to consult an estate planning attorney. In some cases, you may want to protect your adult beneficiary from bad decisions, outside influences, creditors, and even your spouse. You can protect your heirs’ inheritance from prudent spouses or partners who may waste your inheritance or collect it in the event of a divorce.
Protection of Assets
In recent years, asset protection has become one of the most popular and most important reasons people consult an estate planning attorney. If you learn or suspect that a lawsuit or divorce is imminent, it is too late to implement a plan to protect you and your assets. With the right estate planning attorney, you can have a comprehensive estate plan and a solid financial plan that will protect your assets throughout life and after death.
Conclusion
If you want to protect your assets and loved ones when you can no longer do so, you need an estate plan. Without it, your heirs could face a heavy tax burden and the courts could dictate how your estate is divided and even who gets custody of your children.
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