Putting off estate planning is never a good idea. Life happens, and before you know it, “someday” arrives. Everyone can benefit from having a plan in place if the unexpected happens, says Forbes in the article “6 Reasons Why You Should Have An Estate Plan.” It doesn’t matter if you are rich or poor—you need an estate plan. People with families who depend upon them, as well as singles who don’t, all need an estate plan.
Creating an estate plan involves planning for the disposition of your assets when you die, and in the event you become incapacitated and unable to handle your own finances and property. It protects your loved ones from stress, complications, unnecessary costs, and delays about handling your affairs.
It is important to take the time to decide how you want to take care of your family when you are gone. For those who have young children, your last will and testament is the document used to name the person (referred to as a guardian of the person) who will legally raise your children. It also lets you appoint a person (who may be the same person as the guardian of the person, although it need not be) who will look after money and property you leave behind for your children. If you don’t prepare a will, a judge must make all of these decisions with no input from you.
Without a will, a court will also decide what happens to your property. The court must follow the laws of your state, which may not be what you had in mind. Let’s say you have a brother who lives far away and from whom you are estranged. If you don’t have a will and he is your legal next-of-kin, in some states he will inherit everything you own. Yikes!
Proper estate planning should also address tax planning. Creating a plan with an experienced attorney with knowledge of tax planning will allow you to minimize your overall tax liability and make sure more of your assets are passed to the next generation, rather than the government.
In addition, your estate plan gives you the opportunity to take a long look at your life and your legacy. How do you want to be remembered? Do you want to leave behind part of your estate to a charity, school, or facility that has been important to you or another family member? If so, planning for charitable giving should be a part of your estate plan. Fortunately, there are tax benefits to charitable giving, too.
Your estate plan can also include a letter to your loved ones explaining why you have made the decisions you have. Although, this kind of letter is typically not a legally enforceable document, it can be used to support your intentions, and even resolve potential disputes before they arise.
Note that even the best estate plan needs to be updated every few years. Tax laws have changed with the new federal tax laws that were adopted in 2017. If your plan has not been reviewed by your estate planning attorney since 2017, it’s time for a review.
Reference: Forbes (Feb 22, 2019) “6 Reasons Why You Should Have An Estate Plan.”