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Although "estate" is generally associated with wealth, estate planning is not just for the rich. Everyone can benefit from creating an estate plan regardless of family dynamics and financial status.
While end-of-life planning may not be the most fun activity, an estate plan can protect you and your assets after your death and even during your life.
If you haven't yet incorporated an estate plan into your overall financial plan, consider some of the following benefits:
Estate planning shouldn't be reserved for people with a certain level of assets. For most families, there is always something to leave behind as a part of their estate. Whether it's a family home, vehicles, family heirlooms, bank accounts, or any other cherished item, multiple things can fall under your range of assets, regardless of their value.
If something happens to you unexpectedly, you want to make sure these valuable assets are inherited by the heirs you designate. A probate court will decide the rightful owners of your assets without an estate plan. The process costs time and money when your loved ones already have to deal with loss.
Most people tend to think of an estate plan as something they need when they die. However, it can protect you and your assets if you become incapacitated or cannot make your own decisions.
After estimating monetary needs leading up to retirement and beyond, carefully plan for any insurance you would need if you could no longer provide for yourself. Consider designating a healthcare proxy or power of attorney who can make medical and financial decisions on your behalf, if required.
An estate plan also saves you money on state and federal estate taxes or state inheritance taxes. These taxes can significantly decrease the estate value. With proper estate planning, you can transfer your assets to your heirs with the smallest tax possible, making the overall process more accessible and more cost-efficient. Married couples can sometimes avoid estate taxes via AB trusts, ABC trusts, or revocable trusts.
Legacy planning is a part of the estate planning process. You can establish your philanthropic intentions and develop a plan that ensures such goals are implemented in the future. This lets you create a family foundation, set up a charitable trust, or participate in a donor-advised fund to support a cause meaningful to you.
Probate is a court-supervised process of authenticating your will, assessing the value of assets, paying off the credits, and distributing the remaining assets to whom the court sees fit as your rightful heirs.
In addition to the cost involved, the probate process can take considerable time and cause a great deal of distress for your family. The court appoints a personal representative or executor entitled to an administrative fee amounting to five percent of the assets. The attorney hired by this executor oversees proceedings and is entitled to the same percentage, taking a total of 10% of assets away from your loved ones.
You can avoid the process by:
If you have minor children, you need someone to raise your child if something happens to you and your spouse. No matter the likelihood of an event like this occurring, the consequences of not naming a guardian can be catastrophic.
If you don't name a guardian, the court holds the right to decide who will raise your child. A judge can intervene and appoint a guardian on your behalf. You can safeguard your children and make sure they are raised how you see fit by planning ahead of time.
An estate plan is a vital step in future planning. Check out Complete Wills, an intuitive way to create legally binding, custom estate planning documents in minutes if you are ready to begin. Our secure, web-based platform allows users to register and browse through an extensive library of templates, including wills, trusts, and guardianships.
If you have any questions about getting started or want to talk to our experts, reach out here and begin preparing your assets to set you and your loved ones up nicely for the future.