Estate planning is not only just meant for the rich as estate planning has got much importance. An estate plan can secure the future of your loved ones if they don’t have an expensive home to rely upon.
You should read this article to understand the significance of estate planning and avoid devastating consequences on your heirs.
1. Protects Beneficiaries
The primary component of estate planning is ensuring who becomes the heir of your assets. The asset distribution of a person who does not have an estate plan in place is done by the court.
●How Does The Court Handle It?
When it is in the hands of the court, it requires a lot of time and money. Therefore, you should always have an estate plan in place to ensure that your assets go to the person who you want to be the heir.
2. Protects Children
If you have young children, you should make a will that is a critical component of estate planning. You should name the guardian of your children who will take care of them in your and your spouse’s absence.
●What Happens If You Do Not Name A Legal Guardian?
If you do not specify a guardian, the court decides who will take care of your children. You should consult ‘will estate lawyers’ to prepare an effective will.
3. Prevents Big Spendings On Tax
Estate planning revolves around protecting your loved ones. Therefore, you should also give them protection from Internal Revenue Services.
You should transfer assets to your heirs in such a way that they will be exempted from big tax bites. You should choose estate law firms that will be able to reduce the tax burden of your heirs.
4. Eliminates Family Conflicts
When a wealthy person dies, a lot of family disputes take place about the distribution of assets. But an estate plan can help in preventing such petty fights.
You will be able to control your finances even after you die or become mentally unstable. You can even talk to local trust attorneys to set up a trust for someone who will be better off without inheriting a considerable amount.
5. Helps In Avoiding Probate
A probate process revolves around the verification of a deceased person’s will. People often conduct estate planning to avoid probate.
The probate process is time-consuming, and your family has to undergo a lot of hassle. An estate plan is an effective way of avoiding the horrors associated with probate.
- Additionally, an estate plan will also help in reducing your expenses. You will find that a significant amount of a person’s asset gets spent in the probate process.
- It might happen that what you wanted to leave behind for your loved ones will get exhausted in court expenses. Therefore, an estate plan will prevent the court from stepping in to take care of your financial affairs.
6. Support A Charitable Cause
Estate planning revolves around distributing your assets according to your wishes. Sometimes people want to donate their savings to a charity institution. Even after your death, your savings will be used to fund a charitable cause.
You will make a big difference in the world by donating even a small amount of your assets. However, you need to ensure that you distribute your assets properly.
How To Distribute Assets?
In some states, you have to leave a certain amount of your savings for your spouse and children. Moreover, if you have a disabled beneficiary at home, you should also consider their needs.
Some of your beneficiaries may even be dependent on you to cover their expenses, such as university fees.
7. Plan For Incapacity
Estate planning is not just necessary to support your family after your death. You might get into an accident or have a stroke or heart attack, leaving you incapacitated to make financial decisions. Having an estate plan will ensure that someone else will take care of your financial affairs when you are unable to.
●Power Of Attorney
You can grant power of attorney to someone you trust. They will be taking care of your assets on your behalf. A power of attorney ensures that your assets are well-protected in the event of your incapacity.
You can also give health directives as part of your estate plan. The health directives will be followed when you need treatment.
It is essential to know that a health care directive will contain instructions for medical, dental, and surgical treatment. You can even decide how you want to get treated and which hospital you want to be treated at.
A health care directive does not require to be made by a lawyer.
The Bottom Line
Estate planning can be a complex but crucial part of estate planning. You should hire a family estate attorney to ensure that your assets are appropriately managed.
Your heirs can be exempted from tax burdens, and your children’s future will be secured. It can also help in preventing ugly family strife based on asset distribution.