Estate planning is commonly thought of as something people do as they approach their retirement years, and it is often considered an exercise only the very wealthy need to do. However, putting your legal and financial affairs in order is advisable at an earlier age and with any amount of money or assets. Updating your estate plan is also something that can be done at regular intervals or upon reaching certain milestones such as buying your first property, getting married, having a child, or receiving an inheritance.
A well-designed estate plan will ensure that your loved ones are looked after upon your passing, and that your assets are managed and distributed according to your wishes, safeguarding them from any potential challenges or will contests. It will also reduce the amount of tax that is payable on your estate, maximizing the amount that your heirs will receive.
Estate planning can be complicated so it is advisable to seek the help of legal experts such as those at Seasons Law Estate Planning Office who can guide you through the legalities surrounding this area of the law and help you to create a well-prepared and comprehensive plan that ensures your assets are protected and correctly distributed to your intended beneficiaries while avoiding any large tax bills or court battles. This article will look at some of the most important reasons why you should consider estate planning.
Putting an estate plan in place can avoid the need for probate, which is the process by which the courts formally appoint an official to oversee the estate of the deceased and administer the distribution of their assets. The laws around probate vary from state to state, and this is something your attorney can advise you further.
Probate is required in cases where the deceased dies without having created a will, or taking the necessary steps to settle and distribute their assets before their passing. It will then be the duty of the courts to administer their estate which can often be a lengthy and costly process that their heirs will have to pay for. In some cases, probate proceedings can take many months or years to settle, during which time the assets of the estate may be frozen until a decision on the distribution of the estate has been finalized.
In addition to this inconvenience, probate may result in unintended consequences since your assets can end up being distributed to unwanted beneficiaries. As probate records can be publicly accessed you will also lose any right to privacy regarding your personal financial matters which your creditors and family members will be able to view and potentially use to assert their claim to your estate.
Avoids Inheritance Disputes
Inheritance matters can often cause conflicts between family members, and disputes can arise around the intended wishes of the deceased. Estate planning can help avoid any such disputes helping to maintain harmony and peace amongst your family members and any beneficiaries of your estate.
With an estate plan in place, the need for probate can be avoided, and the potential contesting of your will. This is also the scenario where most family disputes arise relating to inheritance and the intentions of the deceased regarding their property and assets. This can cause problems, particularly where the deceased was married more than once and has children from each of their marriages as the number of claimants with a potential right to the estate increases.
A well-drafted will with named beneficiaries and other strategies contained within an estate plan can help you to avoid probate and such contentious situations arising upon your death.
Estate planning is essential for safeguarding your wealth and assets and for ensuring it is not eroded through the unnecessary payment of taxes to the Internal Revenue Service (IRS). Proper estate planning will take advantage of strategies to minimize or eliminate the amount of tax that is payable upon your estate as well as any tax your beneficiaries may have to pay.
For example, certain assets may not be subject to estate taxes if they are transferred into an irrevocable trust or gifted to family members as the IRS allows a lifetime tax exemption on gifts allowing you to give away a certain amount of money over the course of your life without paying gift taxes. Other strategies to reduce or bypass the burden of estate tax include making tax-free charitable donations. By donating to a charity upon your death, you will lower the value of your taxable estate as there are no estate taxes payable on gifts or donations left to charity. There are also no limits on the amount you can donate.
Proper estate planning will ensure you take full advantage of any federal estate tax exemptions allowing for the transfer of your wealth and assets to your chosen beneficiaries with minimal tax liability on your estate.
Protection for Your Family
Estate planning can help you create a secure future for your family and any dependents after your death. Putting such a plan in place can ensure your children will be financially supported and also cared for by appointing a guardian in case your passing leaves them without a parent.
A well-documented estate plan can also ensure certain funds are assigned in a way that you feel is most appropriate taking into account factors such as age and an individual’s ability to manage their inheritance wisely. For example, an estate plan will allow you to distribute assets to your children, typically in the form of a trust. These funds can also be allocated for specific purposes such as for their ongoing care or towards their college education.
Since these matters will not be left for a court to decide, you can gain peace of mind and confidence knowing your loved ones will be provided for and taken care of upon your passing.
Estate planning is an important and highly valuable exercise that should not be overlooked. With a proper estate plan in place, you can avoid potential legal, financial, and personal problems for the people you leave behind.