Many people often think that estate planning is for the rich or for a certain age group. But this is absolutely wrong. Estate planning is important for everyone regardless of the amount of property they have or age. Estate doesn’t just mean mansions and other pricey possessions, such as yachts, or cars; it can be anything like your life insurance, furniture, etc. But what is estate planning, and why is it important? Let’s find out.
What is estate planning?
Estate planning is the process of making the necessary arrangements regarding how everything you own, or “estate’ will be handled in case you become incapacitated or when you die. Your estate typically include everything you own, including your home, car, life insurance, bank accounts, investments, furniture, jewelry, and other personal belongings. Without an estate plan, you cannot decide who gets everything that you own. That’s because it gives you a say in how your property are distributed among your loved ones. An estate plan arranges your affairs and leaves a written record of your intentions and wishes.
If you don’t take your time to make these decisions when you are still alive and able, probate courts and state law will make them for you after your demise. And the results are less likely to reflect your wishes or suit your family’s needs. You can speak to an attorney from Lissner & Lissner LLP to help you get started with a personalized estate plan today.
If you are still not convinced why an estate plan is important, then keep on reading the article to explore some of the reasons why estate planning is important.
- An estate plan allows you to choose who inherits your property
One of the reasons that make an estate plan important is that it allows one to choose who inherits their assets. Even when you die, your assets will be distributed according to your wish. But if there is no estate plan, it will be upon the court to decide who gets your assets. Things can get nasty, especially if someone that shouldn’t inherit your assets get his or her hands on one. By having an estate plan, you can avoid a mess because the plan will indicate who inherits what.
- It protects your young children
Of course, no one wants to imagine the possibility of dying young and leaving behind young children. But if it happens, what next? What happens to the minor children? If you have small children, you need to get prepared for such a strategy. Of course, this will involve creating a will, which is part of estate planning. In that will, you will have to decide who will take care of your little children, and what items they will inherit once they come of age.
Without a will, the court will not only decide how your assets are distributed but they will also choose who will raise your children. If you are concerned about who should raise your children in case you are not around, you will need to include that in your will.
- It also protects your beneficiaries
An estate plan will not only protect your young children but will also benefit your adult beneficiaries. There are plenty of factors that can lead to an adult beneficiary making terrible decisions with their inheritance, such as outside influences, divorce, creditor issues, etc. Your adult beneficiaries may also just be poor at managing money. Thankfully, you can include a clause in your estate plan to help protect your adult beneficiaries from themselves as well as anyone who may try taking advantage of them.
- It helps to reduce estate taxes
Another incredible reason that makes an estate plan important is that it can help reduce state and/or federal estate taxes. State or federal taxes can be huge to your overall estate, which means you will be leaving less to your heirs than you intended. But by having a well-crafted estate plan, you will transfer your assets to your heirs with the little tax burden possible, making the process simpler and less expensive for them.
- You will be able to appoint a conservator
You shouldn’t just name a guardian for your children [if you have any] but you should also name a guardian for your assets, popularly known as a conservator. He or she will manage the assets you have allocated your children to inherit. The conservator will also ensure that your assets are distributed according to your wishes.
- Avoid family mess
You have probably heard of families fighting over the property after the demise of a loved one, right? This is a very common occurrence. One sibling may feel that they deserve more than another. Such fights can get ugly and even end up in courts. Stopping these kinds of fights before they even start is another reason why estate planning is important.
It allows you to choose a person who will control your assets and finances if you become incapacitated or when you die. This can go a long way in quelling any family strife because it will ensure that your assets are handled according to your wishes.
- Avoid probate
When you pass on without leaving a will, it means that you have died “intestate.” So, your state’s law will determine what happens to your assets and who distributes them. The probate court will name a representative who will distribute your assets.
The probate process generally involves a lot of paperwork and it can be time-consuming. It can take months or even years. It can also end up being very expensive for surviving family members. You can reduce all these hassles and die intestate by creating an estate plan. You will have to create a will that names an executor of your estate.
- For your own peace of mind
Up to this point, you can see how stressful not having an estate plan can be. Creating an estate plan requires some work, but you can rest easy once you are over with it. Of course, having full confidence that your assets will be properly handled when you are alive or die can give you peace of mind.