While the thought of creating an estate plan isn’t really exciting – no one would look forward to planning for a possible illness or worse, death – it is nonetheless as important as it can be. Estate planning keeps your family and your loved one’s safe in case something unfortunate happens to you. Making an estate plan brings you and your family the peace of mind that you all truly deserve, and is a necessity for unforeseen events.
An estate plan ensures that life for your kids and spouse goes on, even if you are not with them. It provides financial security and ensures their well-being. From appointing beneficiaries to ensuring that your family is taken care of, a real estate plan is a must.
A typical plan generally includes a final will and testament, powers of attorney, revocable and irrevocable living trust and health directives, etc. An estate plan is more than just designating a beneficiary. It outlines how your financial wealth will be managed after your demise. If you have dependents, an estate plan ensures that they are taken care of.
Evergreen Elder Law, which is a well-recognized, local estate planning law firm, dictates four reasons why everyone should create an estate plan which are as follows:
1. An estate plan helps your family avoid probate costs
Probate is a legal and court-supervised process that calculates the value of your property. It also determines debts, taxes, and other assets that an heir will inherit.
Probate costs are essentially defined as costs incurred when the state or a legal counsel validates a late individual’s estate, values it, pays off any debts or taxes and distributes the remaining to the individual’s hiers. Not only is probate expensive and costly, it is also extremely time-consuming and hence individuals should create an estate plan in a timely manner to save their loved ones the trouble of initiating and paying for a probate. More importantly, an estate plan makes it easier for your trustee to manage probate, taxes, and other legal processes.
2. An estate plan helps your loved ones do away with estate taxes
Taxes are essentially avoided by the setting up of specialized trusts that help minimize and even completely do away with additional estate taxes. Specialized trusts, amongst other planning techniques, are ways in which individuals try to leave as much as they possibly can for their family after their demise, and estate planning is crucial to this position. In some cases, it can help eliminate taxes altogether.
With a plan, you can save your family from paying federal estate taxes and state inheritance taxes. In addition to this, beneficiaries are spared from paying additional taxes that may decrease the financial value of an asset.
Another reason why estate planning is essential is that it helps protect your assets if you face a lawsuit. In such a circumstance, you can be assured that your beneficiaries are protected financially. You know that they will receive their due.
3. An estate plan helps you protect beneficiaries
People often create an estate plan to protect their minor and major beneficiaries. Minor and major beneficiaries need to be protected from bad decisions, reckless spending and legal battles. Minor beneficiaries are generally protected by the creation of provisions on the basis of their age and as they grow old by assigning an adult to oversee matters until they reach the legal age. Major beneficiaries may need to be protected in case of a spouse potentially looking to wrongly benefit from their inheritance and demand some of it in case of a legal battle.
Hence, this kind of plan is especially important for children. Through an estate plan, you can designate a guardian who not only overlooks their financial well-being but also acts as their caretaker. So you can be assured that there is someone who will look after your children’s upbringing long after you are gone. It ensures that you can select a guardian that you trust. Otherwise, the court appoints a guardian, usually an aunt or an uncle, who may not be the right person for the job.
4. An estate plan saves your family from a legal battle
After an individual’s demise, his/her family members always find themselves in an emotional battle between grieving for the departed soul and thinking of how to support themselves financially – if they were dependent on the deceased. An estate plan helps you ensure that your family doesn’t go through such an experience and that you are able to help them even after you are far gone.
Without an estate plan, the court decides who gets to receive your assets. Such a process can take years, which can cause emotional upheaval for your loved ones. The court may not be aware of your family problems. Hence, it may unfairly divide assets and lead to even more problems. If you have a spouse or children, the court is not obligated to provide them access to your financial assets and wealth. Such wrong decisions by the court can cause family rifts that are far more damaging.
No matter what stage of life you are at, you should have an estate plan. Contrary to popular belief, an estate plan isn’t just for people in the higher income bracket. It is for everyone, including middle-class families, with dependents. Whether you are single, happily married, or have kids, you need to get started on an estate plan.
If you are single, then your plan is simple. You only require a will and need to designate a beneficiary. However, if you have kids, you must name a guardian and beneficiary. Moreover, for people who have wealth, an estate plan will describe the division of assets among beneficiaries and its management.
Individuals keep delaying creating an estate plan until it gets too late and their families and loved ones suffer in their demise. In order to avoid such a situation, individuals should create and update their estate plans at the earliest possible instance, and ensure that their family and loved ones are aware of their plans.