One of the biggest mistakes you can make when it comes to estate planning is to assume you do not need to plan.
Estate planning is all about deciding in advance and naming whom you want to receive your assets after your death.
Deciding early on how to distribute your assets will not only keep you in control of everything you’ve worked hard to achieve but also minimize squabbles among family members.
Estate planning is not only for the wealthy. It’s for everyone who wants to make sure their family and loved ones are adequately provided for, should the unthinkable happen.
Here are the five estate planning benefits you should know.
1. Peace for Everyone
You probably have heard horror stories of warring family members, where the war began soon after the death of a major pillar of the household.
Such situations arise when family members cannot reach a consensus as to who should be in charge of finances, real estate, and more. Such squabbles bring hatred among family members and are in most cases arbitrated in a court of law.
But where an estate plan exists, family squabbles are avoided.
Estate planning allows you to choose who should control finances and other assets after you die. This goes a long way towards settling any family disputes that may arise and also ensures your assets are handled the way you intended.
2. Avoiding Probate
When you die, your estate goes through a process that involves settlement and distribution of your assets in accordance with the terms of your will. This is known as probate and can be a lengthy and costly process.
The longer the probate process takes, the more costly it becomes, leaving your loved ones with less than you intended. This explains why most people try to avoid probate in any way possible.
Even with an estate plan in place, your beneficiaries will have to go through a type of probate to distribute those assets. However, not every probate is coordinated by the courts.
Some of the decedent’s property is not considered part of the estate, and therefore, not distributed through probate courts. These include trusts not established by a will, retirement accounts, insurance policies and jointly owned property.
The major ways your property can be settled outside probate courts include putting the property in a trust or by joint property ownership.
Avoiding probate coordinated by courts is one of the key estate planning benefits.
3. Transfer Property to Your Loved Ones Quickly
When you die without an estate plan, your family and loved ones could wait for months to get anything from you.
Estate planning helps to avoid the big delays that can put a financial strain on your loved ones.
With a good estate plan, your family gets all the resources they need to pay for outstanding medical bills, and for anything else that may come up.
4. Reducing Estate Taxes
Estate planning not only seeks to protect your loved ones from financial strain, but also from big tax hits.
By transferring your assets to your heirs, you also put your focus on creating the smallest tax burden for them as possible.
Without an estate plan, the amount your heirs will owe the state could be considerably high.
5. Protecting Beneficiaries
One of the key reasons people prepare an estate plan is to ensure their beneficiaries are taken care of.
If the beneficiary is a minor, you’ll need to designate a guardian and a trustee in the will to oversee his or her wellbeing. Without such a plan, again the court will step in to determine who will raise your children.
If the beneficiary is an adult and is bad at managing finances, you can set up an estate plan that will protect them from making bad decisions.
Wrapping Up on Estate Planning Benefits
Without an estate plan in place, there could be a long-lasting impact on your family and loved ones. And not only for your loved ones but for you too.
Suppose you become incapacitated or suffer a stroke, who will pay your bills or manage your healthcare. A power of attorney designation and a well-drafted living trust package can help to protect you and your family.
If you have any questions on estate planning benefits or need help to update an existing plan, don’t hesitate to get in touch with us.