Estate planning is something many people believe is only necessary for the extremely wealthy. Due to this misconception, only about 45 percent of people currently have one in place.
While you may think that end-of-life planning is a bit morbid, estate plans can help to protect you, your assets and your family after you have passed away, and while you are still alive. While it is a good idea to use the services of an estate planning professional, getting to know some of the benefits of putting this plan in place can also be beneficial.
Avoid Probate
One of the main reasons you should invest in the creation of an estate plan is to avoid probate. Even if you have never had to deal with probate in the past, you likely know that avoiding it is a top priority.
This is mainly because of all the horror stories you have likely heard from people you know who have had to go through probate. To put it simply, for many people, just the thought of probate is enough to encourage them to invest in estate planning services.
Plan for Your Needs
Another common misconception about estate planning is that it is only something that is going to be relevant when you (or the person in question) passes away. What you may not realize is that if you put it in place now, it can help to protect you, along with your assets, if you are ever incapacitated or if you are unable to make your own decisions.
After you have estimated the amount of cash you are going to need until you retire and after that point, think about the type or amount of insurance you may need if you can’t provide for yourself. Also, think about appointing a power of attorney or a healthcare proxy if you are unable to make financial or medical decisions for yourself. All of this can be outlined in your estate plan.
Reduce Estate Taxes
One of the biggest potential blows to your estate is having to pay federal or state taxes or inheritance taxes. This is another reason so many people opt to have an estate plan created. With basic planning, you may be able to reduce and even eliminate the taxes on your estate.
In most cases, this is done by establishing ABC or AB Trusts as a part of your will, or even a revocable living trust. Also, you can use advanced estate planning (with the help of a professional) to help and reduce the tax burden your estate faces.
Dictate What Happens To Your Assets and Wealth
If there is no type of documentation in place when you pass away, such as a living trust or a will, then the state where you live is going to determine how your assets are distributed once you pass away. Having the necessary documentation in place can help to save your family both frustration and time and will help to make sure that your assets and your wealth are dispersed how you desire.
It’s a good idea for you to review the beneficiaries on your life insurance policies and your investment accounts from time to time and make changes if needed. Also, your trust or will needs to clearly outline the way you want your assets dispersed after your death.
If you want peace of mind that your loved ones are protected and that your assets are properly dispersed after your death, then creating an estate plan is a must. If you don’t already have one in place, it’s a good idea to start putting one together as soon as possible.
