It is common for people to mistake estate planning as reserved for the super-rich. What’s the point if you don’t have huge stock portfolios, mansions, fancy cars and other pricey possessions like fine jewelry and yachts?
In fact, estate planning is all about ensuring that everything you have worked so hard for ends up in the hands of the people or causes you care about. Consider these four major benefits of putting your affairs in order with the help of a legal professional.
1. Avoiding probate
When you pass away, the assets you own individually are subject to probate. The probate process normally involves validating your will, assessing the value of your assets, paying your last taxes and bills and distributing what remains to your beneficiaries. It can attract significant costs and take a lot of time. This is why you need to do more than just create a will.
2. Protecting your beneficiaries
It’s important to have control over what happens to anything you leave behind. Estate planning mainly involves designating heirs for your assets. If you fail to set aside such a plan, the court will decide which of your beneficiaries gets what. Besides racking up costs and causing ugly family disputes, the court process can take years.
3. Cutting down estate taxes
Estate planning ensures that your beneficiaries have adequate protection from the Internal Revenue Service (IRS). This is because you can reduce or eliminate some of their liabilities like state inheritance taxes or state and federal estate taxes. This involves setting up mechanisms to ensure that your beneficiaries get your estate’s assets before the state or federal government deducts a huge percentage.
4. Protecting young children
Putting off estate planning leaves everything to chance once you are gone. This includes any young children currently under your care. It’s important to have a plan for them if the unthinkable happens. The plan should point out the people who will take over guardianship responsibilities for your children. Otherwise, it will be upon the courts to decide who will raise them,
No matter how vast or modest your assets are, it is important to have an estate plan that ensures your affairs are in order when you are gone. You should start as soon as you can with the help of an estate planning attorney. Ensure that you also keep your plan current by reviewing it after major life changes like marriage, a death in the family or divorce.