When people hear the word “estate,” they tend to think of huge stock portfolios and pricey possessions like fine jewelry, yachts, cars, antiquities, and arts. However, that isn’t all that an estate entails. An estate can also comprise of your financial security, saving accounts, retirement, and investments, along with other assets you own or control.
Most of us have possessions we consider valuable. We also want our loved ones to be properly taken care of once we are gone—this is why estate planning comes in handy. Everyone can benefit from an estate plan regardless of age or status. And to help you achieve that, you need the help of an estate planning lawyer like Keystone Law Firm.
Before we can dive into the benefits of an estate plan, let’s define an estate plan.
What is an Estate Plan?
This is a series of legal documents that issue a directive on how your assets or estate will be managed in the event of your death or incapacitation. On the other hand, estate planning is the process of making the decisions for the disposal and management of your assets. This process also allows you to draft legal documents that will help you execute your estate plan.
Why Do You Require an Estate Plan?
You require an estate plan because of the following reasons:
It Goes Beyond Your Will
Most people often assume that an estate plan and will are the same. However, they aren’t. While estate plans and a will give your loved one instructions for how your assets should be handled after death or incapacitation, an estate plan contains much more. Other aspects of an estate plan include:
- Powers of attorney appointing specific individuals to make financial and/or medical decisions on your behalf. However, powers of attorney can only be used when you cannot offer instructions.
- Beneficiary designations. These instructions help to indicate and explain who will receive money from retirement accounts, life insurance policies, annuities, and other financial accounts.
- Medical directives clearly outline the type of medical treatment you should or shouldn’t receive if you become incapacitated.
- Trusts that will facilitate how your assets pass to your beneficiaries. This will also potentially offer tax benefits for you and your heirs.
It Helps You Save You Time and Money
Dying without a will means dying intestate; in such cases, the law determines what happens to your property and state. The court will choose a representative to help distribute the assets, primarily the spouse or a close family member. A public trustee will distribute your property if no other member is willing to do the job.
While the case goes on, nobody is allowed to touch the assets. Your assets will be frozen until the court combs through every detail of your assets, pays off your debts, applies state laws, and makes decisions on your assets’ allocation.
This process involves many court appearances and paperwork by lawyers, who will require their service fee to be paid. A probate process can also drag on for years, which can be time-consuming. An estate plan helps prevent this entire process from occurring. Your plan will help:
- Create a will with the names of your estate executor
- Ensure that all your investment have living and correct beneficiaries.
You Can Avoid Huge Taxes Payments
Another fundamental reason for an estate plan is that you can avoid paying big taxes. Estate taxes are assessed on and by the deceased person’s estate. On the other hand, inheritance tax is considered and paid by the estate’s beneficiaries and heirs. With the help of an estate planning attorney, you can ensure your assets pass to your beneficiaries without the government taking a big chunk.
Some ways your lawyer can use include setting up a trust, establishing a joint account, or making an irrevocable gift. Thanks to an estate plan, you can successfully implement these moves.
Protect Your Children
What happens when both you and your partner die and leave children? Who will get custody of your kids and assets? An estate plan allows you to leave an elaborate plan on how and who to take care of your children. You also get to keep and protect your children’s assets until they can access the estate.
You Can Take Care of You
You can also use an estate plan to take care of yourself before death. An estate plan can include the power of attorney and a healthcare proxy. These two legal documents contain instructions on how you want to handle your financial, legal, and health problems.
Remember, estate planning isn’t only for the rich. By planning your future and that of your loved ones sooner, you can be sure that your beneficiaries will never run into trouble when handling your assets.