Many people are under the impression that estate plans are only necessary for those with substantial wealth. In fact, estate plans are important for everyone who wants to plan for the future. For those unfamiliar with the concept, an estate plan coordinates the distribution of your assets upon your death. Without an estate plan, your estate (assets) will likely go through the probate system. There are many reasons that everyone needs an estate plan, but the top reasons are:
1. Protecting Yourself
Most people associate an estate plan with death, but an estate plan also comes into play if you become incapacitated. Through a proper estate plan, you can designate who will be responsible for making your financial and medical decisions, the authority they will have, and restrictions you would like placed on their power.
2. Distributing Your Assets as You See Fit
Without an estate plan, your assets will be distributed according to your state’s laws, which generally prioritize spouses, children and parents. In addition, not having a will or trust in place sets up potential disputes between surviving family members. The best way to ensure that your beneficiaries receive the inheritance you intend for them is by having a well-conceived estate plan.
3. Reducing Taxes
Through a network of trusts and transfers, you can reduce the overall tax burden associated with a sizeable inheritance. For those with substantial assets, more advanced tax planning strategies will be necessary. Regardless of your current wealth, you will likely be able to reduce the taxation of your estate’s assets with the help of an experienced estate planning attorney.
4. Providing for Your Family as You Believe Best
By incorporating the discretion to distribute assets in your estate plan, you can include conditions for each beneficiary. This ensures that the money you want to give your nephew for college will actually be used for college, even if that is still 10 or 15 years away.
As noted, estate planning is for everyone – not just the super-wealthy. Whether it’s avoiding a future family dispute, helping a loved one later in life, or reaching any other goals or objectives, having an estate plan is the best way to protect your interests.
Posted in: Estate Planning