58% of people haven’t started to create a will. Or have even thought about the importance of estate planning to protect themselves and their loved ones upon their passing. We take time to plan out every other thing in our lives.
Everything except estate planning, which is why you’re here. If you’re still unsure of the importance of estate planning, you’ve come to the right place.
Below you’ll find some valuable estate planning tips to help you get your affairs in order ahead of time.
Here are the reasons why future planning matters!
Protects People Listed As Beneficiaries
There are several types of accounts you sign up for while you’re living. One of the standard practices organizations have people commit to is declaring a beneficiary in case of their death.
Someone that’s a beneficiary will be the person that the assets get passed on to when you pass per your signed declaration.
One of the first critical reasons that having an estate plan is crucial is to protect those that you’ve listed as your beneficiaries. This will ensure that everyone you want to pass things like monetary assets or homes you leave behind are given on to the right people.
One thing that can bring out the worst in people is having a family member pass and then having to decide who gets what. We aren’t saying that an estate plan won’t cause ill feelings between those who are beneficiaries and those who aren’t.
However, it will outline and clarify who gets what.
If you don’t have a plan that lists your beneficiaries, the court system will likely be the one that decides what happens to all of your assets. Which, again, can cause friction between your loved ones.
This is because the courts have no knowledge of your wants because it’s not in writing for them to review and enforce.
Offers Protection From IRS Bills
While many people don’t mind inheriting from their family members, one thing that crosses their mind is the amount they will have to pay in taxes if they choose to take on these inherited assets.
When you list people as your beneficiary, one goal you have is to reduce the tax bill they will have as much as you possibly can.
For example, if you use an IDT or irrevocable trust, you can transfer the assets you have to your beneficiary and they can’t be taxed. However, the person that is listed as the “grantor” of these assets will have to file and complete a 1040 form and return it to the IRS.
As long as the assets being transferred are provided at the correct value, there will be nothing to report. This means the trust will essentially pay any taxes it incurs itself without additional payment from the beneficiary.
Estate Planning Takes Steps Beyond a Typical Will
It’s not uncommon for people to assume that a will is the same thing as estate planning. The common theme amongst the two documents is that they both specify how you wish your assets to be handled when you’ve died.
However, estate planning outlines much more than you typically find in your will. For example, the estate planning guide will detail any medical directives you’ve specified.
This is in case you cannot make decisions on your own.
Of course, the medical beneficiary would only happen if you’re incapacitated or have other medical complications. Another detailed piece of information that can be found in an estate planning document is trust.
This aids in the facilitation of property being passed along.
As mentioned previously, this benefits you and the person inheriting the property for various tax purposes.
Takes Care of Your Children
When you consider estate planning or a will, the last thing you think about including information on is your children. It’s essential that you take time to outline who will take care of your living dependents in the event you pass and they are still minors.
Again, like the assets you’ll be passing along, you don’t want to leave the decision in custody for your children up to the legal system. The last thing that will need to happen is your children ending up in the middle of a battle between family members over who they will end up living with.
When you don’t have an estate plan, the court will appoint someone as their legal guardian, but this won’t stop other family members or close friends from petitioning to become their guardians. If there are no other family members alive to take custody of your children and no friends willing to, your children will become wards of the state.
This means they will be turned over to the foster care system until they age out of the system and can begin living their adult lives on their own. Also, it’s best to designate a secondary guardian in the event that the first one isn’t able to take your children or something happens to them, making them an unsuitable guardian.
Estate Planning: Start Today!
When it comes to estate planning, it’s crucial that you stop waiting and take the time to reach out to an estate planning attorney. They’ve got the experience needed to explain the process and guide you through it from beginning to end.
Contact Rhodes Law Firm and let us help you get your assets in order. There’s nothing better than continuing to enjoy your life knowing that you’ve done what it takes to protect your loved ones long after you’re gone.