What is Estate Planning and Why is it So Important?

It looks like a lot of people focus more time on planning their vacation, deciding on a vehicle to purchase, or even choosing a place to eat lunch than they do to their estate planning—selecting who will inherit their assets following their passing. Estate planning may not be as pleasant to think about as booking a flight or checking out mini golf reviews, but not having an estate plan, you can’t decide on who receives everything that you’ve worked so hard for.

Estate planning is not only for the affluent. Not having a plan in place, resolving your affairs following your passing may have a long lasting—and expensive—effect on loved ones, even if your home isn’t expensive, you don’t have a large IRA, or pricey paintings to pass on. Not certain that an estate plan is important? Think about these 4 reasons why you need to have an estate plan and steer clear of possibly devastating repercussions for your heirs.

Main Points

• If you are wanting to decide on who gets what among your assets, you’ll need some estate planning.
• Estate planning also gives you the opportunity to designate your children’s guardian in the case you pass on early.
• Decreasing taxes on what is left behind is a typical estate-planning objective.
• Estate planning decreases the chances of family discord and nasty legal battles.

1. An Estate Plan Safeguards Beneficiaries

If estate planning was once thought of as something only the wealthy needed, that is no longer the case. In this day and age, a lot of middle-class families should have a plan in case something happens to the family’s primary provider (or providers). In the end, you don’t have to be super-wealthy to make a killing in the stock market or in real estate, each of which creates assets that you will want your heirs to get.

Even if you are just leaving behind a 2nd home, if you don’t choose who gets the property when you die you won’t have any authority over what might happen to it.

That’s because the primary factor of estate planning is specifying heirs for your assets, if it’s a summer cabin or priceless paintings. Not having an estate plan, the courts will typically choose who receives your assets, that might take years, run up costs, and get nasty. At the end of the day, the court doesn’t have any familiarity of which sibling is the responsible one and the one that should not have free accessibility to cash. And the courts won’t necessarily rule that the surviving spouse gets it all.

If you pass away not having a will, which is a critical part of an estate plan, the court will decide who receives your assets.

2. An Estate Plan Safeguards Minor Children

Not one person thinks of passing away at a young age, but if you are the parent of minor children, its essential to prepare for the unimaginable. At this point the will part of an estate plan comes into play.

To guarantee that your children are cared for in a way that you authorize, you’ll want to appoint their guardians in the possibility that both parents pass away prior to the children turning 18. Not having a will that appoints these guardians, the courts will intervene and decide who is going to raise your children.

3. An Estate Plan Will Spare Your Heirs a Big Tax-Bite

Estate planning is about the safeguarding of your loved ones, partly meaning the safeguarding from the IRS. Key to estate planning is transferring assets to heirs in terms of creating the most minimal tax liability for them.

Even just a little estate planning can allow couples to decrease much or possibly all the federal and state estate taxes, including state inheritance tax. Additionally, there are ways to lessen the income tax beneficiaries could have to pay. Not having an estate plan, the total that your heirs will owe the IRS could be a lot.

4. An Estate Plan Removes Family Issues

We have all listened to the stories. Someone that is a little wealthy passes away and the conflict among family members starts. One sibling might believe they are more deserving than another, or the other sibling might think they should be in control of the finances even though have a history of handling money badly. Such quarreling can get messy and end up in litigation, with family members fighting with each other.

Hindering conflict before it starts is just another purpose an estate plan is a good idea. This allows you to delegate who is in charge of your finances and assets in the event you develop in to a mentally incapacitated state or after you pass away and will go a long way toward stopping any family clashing and guaranteeing that your assets are managed in which way you wanted.

Additionally, it helps you make individualized preparations, if needed—to plan for a child that has health issues or to set up a trust fund for someone who would be better off not coming into a lump-sum. It enables you you give more to the one who put in the most work in the care for you as you grew older or less to the one whose thorough education you financed while paying much less for the others.

Deciding on if you need to divide your estate directly equal is one of the principal tasks you’ll need to think thoroughly about. Also, if you were previously married—or you have children from another family—an estate plan is essential.

In Conclusion

When you want your assets and your loved ones also safeguarded when you can’t do it anymore, an estate plan is vital. When you don’t have one, your heirs may face huge tax strain and the courts might specify how your assets will be allocated—and even will who raise your children.

Source:

1. Fuscaldo, D. (2020, August 28). 4 Reasons Estate Planning Is So Important. Retrieved September 22, 2020, from https://www.investopedia.com/articles/wealth-management/122915/4-reasons-estate-planning-so-important.asp

Estate Planning Attorney in Phoenix, Arizona

Here at Ogborne Law, we are proud to include estate planning among our services. Your estate planning attorney will work closely with you to draw up all the documents you’ll need to communicate your wishes to the court. We’ll take the time to answer all of your questions and guide you through this important process. If you’re ready to start your consultation with Ogborne Law, visit our Estate Planning Consultation request page.

There are so many aspects to consider in estate planning, and we haven’t even touched on those individuals who own a business!

You’ve worked hard for your life, and you need to protect it. You owe it to your family and your legacy to take care of planning now.

Contact Ogborne Law to schedule your estate-planning session.