Many people devote so much time to planning vacations, choosing a property, buying a car until it’s time to prepare an estate plan. Very few people think about the importance of preparing an estate plan because of the assumption that it is only for the wealthy. Estate planning can be complicated, and although it may not be as fun as planning a vacation, it is crucial.
Estate planning allows you to choose who will inherit your assets and manage your estate once you are dead or incapacitated. Otherwise, settling your affairs could mean a lengthy and costly process for your loved ones, even if you are not rich. Here are the four big reasons why estate planning is critical.
It protects your estate beneficiaries.
The era when estate planning was for the rich is long gone. Today, even middle-class families estate plan to choose what happens to their assets once the breadwinner is gone. Even if you only have your second home and car to leave behind, estate planning is essential to protect your beneficiaries.
The main part of estate planning is writing a will or designating heirs for your various assets. Without an estate plan, the court decides who will inherit the assets, a process that often gets ugly, costly, and can take years. Therefore it is vital to plan your estate to protect your heirs.
It eliminates family wrangles.
Family conflicts are common after a breadwinner dies. A rich daddy, and suddenly all the siblings are fighting about managing the assets- some think they are well placed to manage the assets than the others. Such family wrangles can be ugly and result in lengthy and costly court processes.
So one of the reasons to plan your estate is to prevent family wrangles once you die. When planning your estate, you choose who manages your assets when you die or become mentally incapacitated, ensuring they are handled according to your wishes.
It protects kids
Many people do not prepare estate plans because they do not want to think about dying young. However, accidents happen, and if you are the parent of small children, estate planning is critical to protect them. A part of estate planning is naming their guardians if you die while the kids are young.
You can also arrange for individualized plans, for instance, set up a trust fund for one who is better off not inheriting a lump sum. Otherwise, the court will decide who will raise your kids and dependents after your death.
Reduce the tax burden
Another reason to plan your estate is to spare your heirs the big bite of taxes. Some taxes likely to apply in estate matters include estate taxes, gift, and inheritance taxes. One of the estate planning goals is to transfer assets to your heirs while reducing their tax burden. Your attorney can advise on reducing the income tax your assets beneficiaries may have to pay.
You must prepare an estate plan if you want your wishes regarding your assets to be executed when you are gone.
Top Five Highly Paid Law Specialties
A Career In Law
The Most Absurd Laws of Different Countries