You may be procrastinating about developing your estate plan, thinking that you are not wealthy and do not have a lot of assets, so why would an estate plan be important?
The reasons may surprise you. You probably have more assets to protect and pass on to your heirs than you think. Here are three reasons to take action and put a plan together.
Safeguarding your assets
The assets you have include items like your home, your bank accounts, your 401(k), your vintage baseball card collection and the ’60 Chevy Impala you and your son have been restoring. You will want to protect your assets and keep them safe from issues like “spend down,” which refers to reducing your financial status so you will be eligible for Medicaid in the event you need to become a nursing home resident at some point in the future.
You do not want your heirs to pay excessive estate taxes on such items, and there are ways that you can formulate a strategy for reducing or avoiding costs. With the properly constructed estate plan, you can reduce inheritance taxes. You can also avoid probate and therefore any associated costs.
Statistics indicate that more than half the people in the United States do not even have a will. You do not want to be in that category. The estate planning decisions you make will not only affect your loved ones after your death but will also allow you to put a strategy in place if you require help during your lifetime. Estate planning is all about management and control and there are many parts for you to consider: a will, a trust, powers of attorney, perhaps a lifetime gift you would like to make. Above all, you will be exercising control over your assets and how you want them distributed when the time comes. You may not be wealthy, but estate planning is as important for you as it is for the ordinary millionaire.