Oddly enough, it seems like many people tend to devote more time to preparing for their next trip, selecting a vehicle to purchase, or even choosing a spot for lunch than they do to estate planning. Determining who will receive your assets when you’re gone may not be a thrilling task, but without estate planning, you can’t select who inherits everything that you worked so hard for.
There tends to be this misconception that only the rich or extremely wealthy require a will, but this simply isn’t the case. Reconciling your affairs when you go may have an expensive and long-lasting impact on your loved ones without a plan in place. Regardless of whether or not you have a pricey home, huge IRA, or treasured art to pass on, you need a plan in place for when you pass on. If you’re not convinced, consider these few reasons for having a will and avoid potentially destructive consequences for your beneficiaries.
1. Estate Planning Protects Your Heirs
Many if not all middle-class families must have a plan for when something happens to their primary breadwinner or breadwinners. You don’t have to be the most affluent or wealthy individual to do well for yourself and produce assets that you’ll want to pass on to your beneficiaries.
If you don’t choose who obtains your property when you pass away, you won’t have any control over what happens to that property, even if you’re only leaving behind a few small assets, such as secondary vehicles, or one large, such as a vacation home.
This is because the primary purpose of having an estate plan is deciding which people will be the heirs for your assets. Without this, the courts will designate who receives which assets or pieces of property. However, this procedure will likely take several years, racking up fees, and potentially triggering a bitter dispute between loved ones. To put it simply, a court will not know what you truly wanted for your property, which is why it is your responsibility to leave behind a plan for the court to abide by.
2. Estate Planning Protects Children
As we’ve already mentioned, the idea that you won’t be around forever is a hard pill to swallow, but the thought of passing away at a young age is even more difficult. If you’re the parent or primary caretaker of young children, you must arrange a plan for the unthinkable.
To guarantee that your child or children are properly taken care of in a manner that you’ve permitted and prefer, you’ll need to select their guardians in the aftermath of both parents or caretakers dying preceding the child’s 18th birthday. Again, without a will that specifically designates these new caretakers, the courts will step in to choose who will raise your children.
3. Estate Planning Protects Against Large Taxes
One of the most crucial aspects of estate planning is allocating assets to heirs while creating the lowest possible tax burden for them.
There are plenty of strategies and tools in place that enable people to reduce most if not all of their state and federal estate taxes and state inheritance taxes. Moreover, there are also methods for limiting the income tax beneficiaries may have to pay. The point here is that without a plan in place, the total that your successors will owe the IRS could be quite a lot.
4. Estate Planning Mitigates Family Disputes
We’ve all heard the awful stories in which a person with a number of valuable assets dies and the battle between loved ones begins. Such bickering can get ugly and end up in court, with family pitted against family and friend pitted against friend.
Estate planning is a necessary tool that eliminates this issue before it even arises. It allows you to decide who controls your funds and resources if you become mentally debilitated or after your death. It will go a long way toward suppressing any family conflict and ensuring that your property is handled in the way that you envisioned beforehand.