As the name suggests, estate planning is a plan to deal with your estate. Estate planning is an essential tool to manage your assets when you are alive and die. This planning primarily deals with the aftermath of your death, like what would happen to your assets after your death or who you would give them to. All these things are decided through estate planning.
What Does an Estate Consist Of?
Estate is everything that you own. It can be your car or your life insurance. Your possessions and savings account all come under the umbrella of the estate. All the property that you own also is part of your estate.
The Significance of Estate Planning
Estate planning is necessary for everyone, but most people do not opt for it. Some don’t know about it, and some think it is unnecessary. But in reality, estate planning is for all of us. This is supposed to take care of your loved ones when you are no longer around. Thus, here are some reasons why estate planning is a must requirement for all of us.
You Can Choose Who Inherits Your Assets
This is an essential step that needs to be taken while planning your estate. Often you might think that why do you require to name anyone who inherits your property or other possessions. But it just so happens that after your death, the court decides who should receive your assets. You may believe that this will resolve itself as your state’s intestacy laws will take care of it. However, money tends to bring out the worst in people, and in our profession, we see a lot of family feuds over inheritance. You may have overlooked things like being on the deed of one of your children’s homes to help them qualify for a mortgage. This would create an issue as now your other children can take advantage of the situation and try to claim those shares as part of their inheritance. Thus, it is always better to have estate planning to avoid such a family mess.
You Can Reduce Estate Taxes
A good estate plan can include tax mitigation strategies. For example, the current gift tax exemption is at a record high and can be used to limit your tax exposure. In addition, by creating a will and trust, you can achieve a hundred percent on a step-up basis for your primary home at the first spouse’s death.
Protect the Beneficiaries
Do you have children that are under the age of 18? These children are considered minors. Therefore, it is essential to have good estate planning in such a scenario. Remember, without the proper documents such as a will or trust, your beneficiaries are subject to either probate or administrative proceeding to receive their inheritance. Furthermore, a minor who stands to inherit will have no say over such inheritance until they come of age, and a guardian will be put in charge of their finances. A good estate plan allows you to choose who that guardian will be and how your monies are to be used for the benefit of your minor children.
This is why estate planning is a must, especially when families have minor children. Thru careful planning, you can protect and ensure that your children are well taken care of and hopefully not taken advantage of due to their inheritance.
Protection of Your Assets
Well, we love our belongings. Even if it is a small co-op or a big house, whatever we own is dear to us, and we want it to be taken care of when we are not around anymore. Estate planning is the perfect tool for ensuring that your assets are kept safe. A good estate plan can protect your hard-earned wealth from creditors and see that upon your death when the assets pass to your loved ones. They pass outside of the marital property and their creditors.
Protection of assets is essential as it makes sure that your heritage is kept safe and will continue to flourish long after your demise. In this respect, estate planning is the only and best option for asset protection.
We hope that this article has given you a brief idea of how estate planning is essential for all of us. The best time for estate planning is now. The sooner you do it, the better it is. Then, you will be at peace knowing that your assets are distributed according to your wishes, safeguarded, and preserved for your loved ones.