There is a common misconception that estate planning is only for the very wealthy or much older generations. Perhaps the traditional diction used, “estate planning” is the culprit for much of these misconceptions, because most of us may not think of ourselves as having an “estate”. The truth is that anyone can have an estate plan. Estate planning is not just a financial tool reserved for the top 1%; it is more accurately a tool that protects your family and preserves your interests if something were to happen to you. Estate planning is a tool that everyone should be using that encompasses all important components of your life, from financial, to health care, to digital presence and to end of life wishes.
We argue that you can’t afford to not have an estate plan and here’s why:
Reason #1: To Protect Your Family
Reduce their burden: If something happens to you, your family will go through lot emotionally. Without an estate plan, decisions will need to be made on your behalf. Your family will be required to make choices about money, end of life wishes or healthcare. These decisions can be hard to know or hard to decide by loved ones. But with a documented estate plan, you have already made these decisions and likely discussed them together, relieving your family of the burden of trying to work out what is best during an emotional time.
Eliminate inter-family and legal battles: Without an estate plan, your family will be headed to probate court to settle your affairs. Probate court is a specialized court that exclusively deals with the administration of estates. If you don’t make decisions over how you want your affairs handled, the probate court will decide for you. This is where family will convene to give testimony so that the courts can decide things like: determining the validity of a will, selecting an estate administrator, totaling your assets and debts, determining applicable estate tax, identifying heirs or other relatives eligible to receive a portion of your estate and distributing your estate to those heirs. Probate court is also time consuming and expensive (check out this article for a simple breakdown) and a place that most people would like to avoid.
Secure Your Children’s Welfare: If you have children, you needed an estate plan the moment they were born. It will document guardianship wishes for your children and how you want them to be supported if you are no longer able. This is precisely why estate planning is intended for young families as much as it is for aging individuals.
Reason #2: To Maintain Control
Chances are you have worked incredibly hard to get to where you are today. And while it can be uncomfortable to think about, you have the opportunity and responsibility to decide how you want your interests and possessions to be handled after you’re gone or unable to manage them personally. If you don’t decide, the courts will decide and family members can disagree over the intentions of the deceased or incapacitated. To avoid any confusion over what you want, have an estate plan in place so that your wishes are executed upon just as you determine.
Reason #3: To Reduce Estate Taxes
Most people don’t want to bequeath their assets to the government. But this is exactly what can happen if you don’t have an estate plan in place. Estate tax is a tax levied on the net value of the estate (also known as net worth) of a deceased person before distribution to the heirs. You should know that there are ways for you to limit your estate tax exposure that allows you to leave more to loved ones and other causes that matter to you.
Reason #4: To Dictate Your Digital Footprint
Estate planning also covers your digital assets. Today, you need to plan for what happens to your social media accounts, emails and other online accounts. Do you want social media accounts removed or memorialized? Who can close online accounts that access sensitive personal and/or financial information? These are all issues that estate planning considers and helps you dictate before death or incapacitation.
The best way to think about estate planning is that it is lifelong planning that protects your interests during every stage of your life. Estate planning covers what is most valuable to you in this world: the people that you love. Your estate plan is your directive for how you want matters of your life handled — and no one has more right to decide these things than you. The cost is simply too high without one.
WorthPointe specializes in estate planning using strategies to legally structure the disposition of your assets for the maximum benefit of those you leave behind, including careful planning to mitigate estate taxes. To learn more about setting up an estate plan, contact our team of experts here.
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