An average person hardly ever thinks about estate planning. However, if you’re not ultra-rich, it doesn’t mean you don’t need an estate plan. Estate planning is an important part of every individual’s life who owns a few assets, savings, and other items that need to be passed on to the future generation. Having an estate plan means securing your hard-earned wealth and your loved ones. Typically, estate planning means your home, finances, and other assets are taken care of after your death. It allows you to control your affairs and provide for your family even after you are gone. Estate planning is the process of determining how your wealth will be distributed after your death. However, a comprehensive estate plan is much more than simply who will inherit your assets. It is a detailed plan that includes your death and end-of-life medical and financial decisions, in the event, you become incapable of making these decisions yourself.
Why Do You Need an Estate Plan?
You might not have a mansion, valuable art, diamonds, and other items of high value. However, as long as you have some property, savings, or other investment, creating an estate plan becomes necessary. Imagine your loved ones fighting over who gets what and how much after you’re gone. With a proper estate plan in place, you get to have a say in how your wealth is distributed among your heirs. Whether you want secure your family’s future or intend to support an organization or institution you care about, estate planning ensures that your wishes are fulfilled. To help you better understand estate planning, we have listed below some key benefits of having an estate plan.
1. Safeguard Your Own Needs
A complete estate plan is a set of documents like Will, trusts, and power of attorney. There is a misconception that is estate plan comes into effect only after a person’s death. However, the truth is estate planning also protects you and your assets in the event you become incapacitated or unable to make decisions for yourself. It allows you to determine who and how your medical and financial decisions should be made on your behalf if necessary. Careful estate planning ensures that your wishes are fulfilled even if you are not able to speak for yourself.
2. Protects Young Children
It is normal not to think of dying young. However, in the worst possible scenario what will happen to your kids if both parents die. If you have minor children, it is important to prepare for the unthinkable. Estate planning isn’t just about the distribution of assets but also allows you to name the guardians of your minor kids if both parents die before they turn 18. If parents die without taking care of guardianship then the court gets the authority to decide who will raise the children. Estate planning can protect your children from the foster care system.
3. Minimize Transfer Taxes
Estate planning protects your loved ones. It not only prevents family disputes but also allows the smooth distribution of your assets. Moreover, estate planning helps in minimizing inheritance taxes and protects them from the Internal Revenue Service (IRS). An experienced estate planning professional can reduce the tax burden for your heirs.