Approximately 60 percent of Americans do not have a will or estate plan even though they know should. Do you have an estate plan? If not, it’s important to take the time to get it done. Wondering about the importance of wills and estate planning? Here are ten advantages of estate planning and why it’s vital you do this to protect your family and your assets.
What Are Wills and Estate Planning?
Before we talk about all the benefits, let’s make sure you understand what these plans are. There is some confusion with some people when they think about wills and estate plans.
Some people believe only the rich need to have an estate plan. That couldn’t be further from the truth—everyone has an estate.
Your estate includes everything you own, including the following:
- Bank accounts
- Real estate
- Life insurance
Regardless if you own a lot or just a little, you still have an estate. An estate plan includes various documents such as trusts, a will, and more. These documents outline your wishes after you pass away.
Now, let’s take a look at the benefits of having an estate plan.
1. Provide for Your Family
If you don’t have an estate plan, your family ends up with less and it takes longer for them to get it. This causes your loved ones to be in limbo, and they may not have enough money to pay for their living expenses. It’s not uncommon for families to face financial strain for months or even years after a loved one passes away unexpectedly.
If you have an estate plan, you can make sure your family is protected and not left in financial ruin without income.
2. Protect Young Children
Nobody wants to die young or think about it, but if you have small children, you need to prepare for this scenario. The will portion of estate planning ensures your children receive the care you want.
You want to name their guardians if both parents die before kids are 18. Without this will and names of guardians, the court steps in and decides who raises your children.
3. Reduce Your Estate Taxes
By having an estate plan, you can reduce or possibly eliminate estate taxes through an irrevocable trust. There are many ways to achieve this objective. One of the ways we frequently use to avoid estate tax is a trust that transfers everything to your beneficiaries or a charity of your choice. This is a form of irrevocable trust.
This type of trust ensures your estate does not go to probate and moves your assets into a situation where you relinquish ownership and someone else acts as the trustee.
If you can’t control these assets, you don’t own them when you pass away. This is a simplified example, but because of the transfer of assets, they do not contribute to your taxable portion of your estate.
4. Avoid Probate
If you do not have a living trust (this is a different type of trust than we discussed in section 3 above) or will when you pass away, the probate court and state law will control how assets are distributed to your family. This process can take a lot of time and money.
Additionally, if your estate goes to probate, it is public record. A trust on the other hand ensures your family’s privacy and protection of assets.
5. Make Your Wishes Known
With the right plan, your family knows your final wishes and intentions. This makes sure there is no fighting, and your family can avoid conflict. You can make sure everything is the way you want it.
6. Family Can Access Assets Quickly
Without a will or estate plan, it can take your family anywhere from three to nine months to get anything after you pass away. With the proper plan, your family gets the money quickly to pay for expenses such as medical bills, your funeral, and other normal expenses.
7. Save Your Family From Difficult Decisions
Imagine your spouse or children facing the decision of whether to pull the plug or deciding how to handle your remains? These decisions are heart-breaking.
You can help ease this burden by planning for some scenarios in advance. You can specify how you want end-of-life care, such as ventilators, and disposal arrangements. There’s no one better to make those kinds of decisions than you, so your family knows they are doing what you would want.
8. Plan for Incapacity
There is more to estate planning than death. Unfortunately, people are incapacitated by a sudden medical episode (such as a stroke) or an accident. This leaves the person unable to manage financial affairs.
If this happens to you, who takes care of your bills or managing your care? Having a power of attorney designation for both healthcare and financial decisions saves your family a lot of money and time to handle everything according to your wishes.
9. Make Sure Your Business Runs Smoothly
If you own a small business, you absolutely need an estate plan. It’s one of the most important things you should do. If you don’t have one, your business would fall apart quickly, and maybe even completely, without you.
Imagine the financial hardship for your family. You can make sure there is an orderly transition with an estate plan. This plan outlines what happens if you die or are disabled.
10. Lessen Your Family’s Burden
When someone dies, it’s hard on the family. Grieving a loved one and planning a funeral at the same time is even harder.
While you plan your estate, you can specify and handle your funeral arrangements. You can also pay for it to lessen your family’s burden. Your family won’t have too much funeral planning.
Start Your Estate Planning Today
Don’t wait to discuss your wills and estate planning. As you can see, having these plans prepared protect you and your family.
Looking for assistance? At Smith Barid LLC, we are here for you. Our wills and estate planning lawyers are ready to help you protect your family—contact us today to get started.