Many things in life come unexpectedly. One of them is death. It’s prudent to ensure that everything is taken care of when you pass away or when an unfortunate thing happens to you. If you have assets and family members to think of in the event of your untimely demise, you need to consider estate planning.
The primary purpose of estate planning is to ensure that your assets will still be available to you after you die. By creating a will, you can determine who will own your assets and how they will be distributed. You can also decide where your property will go after you die.
Most of the time, people ask a lawyer to help them with estate planning. Others also get services from teams like Willed to help them create this type of legal document and manage their assets in case of their deaths.
In this article, you’ll learn more about what estate planning is and why you must do it as soon as possible.
What is Estate Planning?
Estate planning is the act or process of arranging and preparing for the future management and disposal of a person’s property. Ideally, its creation happens during the individual’s prime, in case they become mentally incapacitated or meets their untimely demise.
Generally speaking, estate planning includes the transfer of resources to the grantor’s designated beneficiaries after their death. These beneficiaries are usually people who would benefit from the assets transferred, such as family, relatives, or friends.
An estate planner may also devise a plan to ensure that all debts of the deceased are paid and that no claims against the estate are made. Also, they may arrange for the safe custody, treatment, and upkeep of probate assets, including cash and bank accounts, and make arrangements for inheritance taxes.
Why is Estate Planning Important?
There are various reasons why estate planning is essential. Some of the most common reasons are as follows:
1. To Protect Your Beneficiaries
Many people think that estate planning is only for the rich. However, many middle-class families also need to have a plan if the breadwinner of the family dies. The main component of estate planning is designating heirs for your assets. Your assets could be your car or your home.
Without an estate plan, the court decides who gets your assets, and this process could take years to finish. It also involves a lot of fees, and it can get messy.
It also protects your children and assures them that they have a future no matter what may happen. In your estate plan, you should also name a legal guardian for your children if you die before they turn 18.
2. To Reduce Taxes
Estate planning is also giving your beneficiaries protection from the Internal Revenue Service (IRS). When you transfer your assets to your heirs as stated in your will, you reduce a significant amount of federal and state taxes and inheritance taxes. There are also some ways to reduce the income tax your beneficiaries will have to pay.
3. To Give You Peace of Mind
If you plan for your passing, then you are more likely to have peace of mind. Your assets will be distributed to those whom you care about, and you won’t have to worry about anything unexpected occurring with them.
This is very helpful in your illness or even if you pass away due to natural causes. You will also be able to leave a will if you so desire, and this will allow you to control your assets in certain situations, such as if you get married. It also allows your family to pay for your funeral and other related costs.
4. To Avoid Family Conflict
When it comes to distributing assets of a dead relative, there will be times family conflicts will arise, especially between siblings. One may think that they deserve more of their parents’ assets, or the other might think they should be in charge of dividing the assets. This messy family squabble can get ugly and end up in court before you know it.
One of the reasons estate planning is essential is to avoid family conflicts like these to happen. Since you’re still alive, you have total control of all your assets and which family member will inherit which asset. This will also help you set up a trust fund for your children as they might not be responsible yet for inheriting the lump sum of your assets in case you die before they become adults.
There are several reasons to take the time to plan your estate. With proper estate planning, you can ensure that your surviving family members are appropriately taken care of and can enjoy all of the rewards of your hard work. This also helps prevent any family conflict that may arise during the division of your assets.
Whatever path you decide to take, make sure you consult with an estate planning attorney well before making your decision. This will ensure that you don’t make any estate planning mistakes, and you set everything accordingly before you die.