Estate Planning is the process of creating a plan for you, your family, and your assets in case of emergencies. An Estate Plan is a collection of multiple documents, like Wills and Powers-of-Attorney, that help you plan for the same.
A common Estate Planning misconception is that it is only for the rich and the old. However, this is not true.
While the rich may need to plan for their vast portfolio of assets, it is equally important for people who feel they do not have enough wealth to ensure all their assets are passed on to their dependents. Moreover, emergencies occur regardless of age, and Estate Planning helps you be prepared for them.
If you’re still not convinced why Estate Planning is important, here are 24 more reasons:
- To protect yourself when you’re alive: Estate Planning lets you execute plans for emergencies and your assets even when you are alive. Most documents, like Powers-of-Attorney and Living Wills, go into effect immediately after signing.
- To ensure all assets are accounted for: Not being able to locate a loved one’s assets after they pass away is a common problem that leads to financial and sentimental grief for the survivors. Creating an Estate Plan can easily avoid this.
- To ensure your wealth is accessible: An Estate Plan will help your family locate and access all your assets if you were to die. This way, you will be able to ensure your dependents can continue to live as though you were still around.
- To choose who executes your plan: An Estate Plan is effective only when it is executed properly. You can make sure this happens by appointing someone you trust to be your Executor.
- To save your family from wasting time and money: In the absence of a Will, families spend lots of time and money procuring the right documents, paying avoidable taxes, finding the right professionals, etc. Creating an Estate Plan can ensure your family members make the most of your assets.
- To help survivors deal with finances properly: Leaving instructions on how your finances should be dealt with can help your family be aware of their financial situation after you’re gone. This can include any debt, money owed, all Estate proceedings, etc.
- To save your family from financial and legal grief: Your loved ones need to identify your assets and sort through them while mourning your loss. Without an Estate Plan, they may not have the financial or legal expertise to make the right decisions. However, you can make this process easier by providing instructions and appointing an Executor to guide them.
- To facilitate liquidity: An Estate Plan lets you make provisions to liquidate your assets and help your family members have access to cash. This can help them settle debt, receive monthly income, pay executor’s fee, and cover other fees like capital gains tax and estate duty.
- To decide who gets what: In the absence of an Estate Plan, the court decides who receives what in your Estate. More often than not, this could be someone you do not prefer. The easiest way to avoid this is by naming your Beneficiaries.
- To help your loved ones evade family conflicts: While there may be dissatisfied Beneficiaries, explaining your decisions to them in your Estate Plan can reduce the causes of family conflicts.
- To reduce probate stress for your family: A probate includes proving the validity of the deceased’s Will, cataloging the property, contesting the Will, etc. Most often, this takes plenty of time and money. Creating a Trust is a common method to avoid this process.
- To protect your minor children: Writing guardianship letters and setting up Trusts will ensure your minor children are protected emotionally and financially. By doing this, you would make sure your children are looked after by someone they trust and have the wealth to finance their needs.
- To instruct how your children receive assets: You can use a Will to instruct your Executor to transfer wealth to your children in regular intervals rather than in one transaction.
- To provide for a loved one with special needs: A loved one with special needs has different requirements to be taken care of. Creating a Trust for them is an efficient way to ensure all their needs are looked after even after you pass away.
- To help your Beneficiaries reduce taxes: Setting up Trusts, making irrevocable gifts, and creating joint accounts can help your dependents minimize taxes. Create an Estate Plan keeping federal estate taxes, gift taxes, and state inheritance taxes in mind. It is suggested to consult with an attorney to make the most efficient plan.
- To protect assets from Beneficiary creditors: Some of your Beneficiaries may use their inherited assets to pay off debts, gamble, etc. You can avoid this situation by adding a Spendthrift Trust to your Estate Plan. Depending on your Beneficiary’s spending habits, you may choose to give or withhold Beneficiary control.
- To prepare yourself and your family for emergencies: An Estate Plan includes multiple legal documents, which detail who can make emergency decisions, what decisions can or cannot be taken, etc. This lets you and your family react and respond better during emergencies.
- To choose who takes decisions on your behalf in emergencies: You might not be able to make any decisions during emergencies. While you may trust a specific loved one to make those decisions for you, they would legally not be allowed to do so unless you have a Power-of-Attorney. An Estate Plan can help you do this.
- To outline the treatment you want or don’t want in emergencies: While you may not be able to express your opinions for medical treatments in an emergency, you can still make them known. Including an advanced directive in your Estate Plan will help you be in control of the situation.
- To donate to charity: You can use your Estate Plan to display philanthropy too. Moreover, leaving assets to a charity can help you save taxes.
- To ensure your last wishes are fulfilled: Writing down your last thoughts, values you want to pass on, plans for your family members and your assets, will make your last wishes known to your loved ones.
- To provide peace of mind to your family members: You can help your family deal with your loss better by creating an Estate Plan. Your guidance would provide them with confidence to manage the Estate.
- To enjoy peace of mind: Creating an Estate Plan provides peace of mind to your loved ones and yourself. You can sleep peacefully at night knowing you’ve done everything to protect your family if something happens to you.
- To protect your Digital Assets: Most often, Estate Planning is limited to a traditional understanding of assets. However, it can also help you protect and pass on your Digital Assets like photos, videos, and cryptocurrency.
Create a Digital Estate Plan to easily pass on your Digital Assets today!