Estate planning is the process of setting up instructions to manage the assets during lifetime and after your demise. It is done to be ensured that your family, business, assets, and charities are protected in your absence. Now while thinking about the estate, people often understand that it means a huge property and thus estate planning is only for the wealthy people. But the truth is irrespective of your financial status, everyone is benefited from estate planning and thus it is a must for each and every individual. However, most of the people avoid this discussion and planning.
The caring com survey revealed that less than half percent of American adults have their estate plan documents ready while the majority are neglecting the topic. People are busy in financial planning but neglects its important aspect i.e. estate planning. While talking about one’s death makes individuals uncomfortable, the estate planning is not always about death, it is also about protecting yourselves, your family and assets during your lifetime as well. So if you haven’t yet included your estate planning in your financial planning and are in any doubt, we have summarized some reasons to help you get it done.
Do I Need an Estate Planning?
Plan your goals/needs:
Estate planning also comprises your plan to protect yourself and your assets in case you are unable to take decisions due to your disability caused by an accident or any disease. After evaluating your cash flow requirement during your entire life, you need to decide the type of insurance you may require in case you are not able to earn. Apart from this, a health care proxy and power of attorney are required to assign a trustworthy person to take care of your proper treatment and manage the financial affairs on your behalf at the time you ever are unable to do so.
Distribution of the assets as per your choice:
If you are still not ready with your estate plan documents like a will or living trust at the time of your death, then the court will decide the distribution of the property as per the state law. Hence, proper documentation will ensure you that your assets are being distributed to your chosen beneficiaries as you want. A living trust is preferred over a will as the assets which pass through living trusts avoids probate. In this way, your family’s time and money will be saved from getting invested in probate court proceedings.
Probate is said to be the process of validating a deceased person’s will, placing the value of the assets, paying the bills and taxes and distributing the remaining to the beneficiaries. It includes wastage of a lot of time and money and the family also gets burdened. Hence, it is advisable to have estate planning done to save your family form all these mess.
Avoid Estate and federal taxes:
In paying the state and federal taxes, people suffer a significant loss of their estate. Though federal estate taxes are now imposed on very wealthy estates only, but few states still impose these taxes. Through some basic planning like by setting up of separate trust (AB or ABC trusts) or by adopting wealth transfer strategy, you can minimize your tax.
Protect young beneficiaries:
If you have minor children, you can designate a guardian for your minor children to take the responsibility of your child after your demise till your child becomes a legal adult by attaining an age of 18 or 21 depending on the law of states where you reside.
Plan for benevolent Goals:
You can also plan your legacy while planning your assets in order to outline how you want to be remembered after your death. While some people can decide to set up a charitable trust or start a family foundation, on the other hand, some can also engage in a donor-advised fund to support important causes. However, these required to be discussed with the family.
Final arrangement management:
Estate planning can also be used to include instructions to decide what should happen to your body after your death like burial, cremation or organ donation. You can also appoint a person who will be responsible to ensure that your wishes are being taken care of after your demise. Apart from that, you can also mention your wishes in a detailed form as well.
Estate planning is a very complex process and it is very crucial for you and your family. Either you are single or married, young or old, your assets are large or small, estate planning is a must for you to secure yourself and your family as said the sooner you the better.