If you are an individual who has a significant amount of assets or a family with kids, there are practically no reasons why you should not have some type of estate plan. In case you have not gotten around to establishing it yet, now is the time to do so as the benefits outweigh the costs by an enormous margin. For instance, have you ever considered giving your assets to the government and letting it decide who in your family should become the new rightful owner? Odds are this idea sounds completely ludicrous.
In reality, though, that is just one of the many things that could take place if you do not have any official estate plans upon your death. Hence why you must spend some time figuring out the ins and outs of the process and contact a lawyer or accountant as soon as possible. Doing so will help avoid countless issues down the road, and it will further secure your loved ones.
The Basics of Estate Planning
According to Regan Rohl, who is a senior financial advisor for Wells Fargo, estate planning relates to preparing for the worst-case scenario and determining where your belongings go. In translation, making a detailed outline of where all of your assets, which account for your estate, will go when you die. Since nearly every person has some form of estate, you have at least a few items that are worth accounting for. This is especially true for individuals who have spouses and children that will have to bear the brunt of the financial hit.
Give However You Please
While the list of benefits of estate planning is long, giving to whomever you want is normally at the very top. This does not necessarily require a plethora of clarification as it is in human nature to dislike giving up the rights to their assets and having someone else lay claim to them. Well, if you do not have an estate plan, there is a good chance that some of your loved ones will not get the most important items. The reason why is that the state applies a form of a ranking system where people who are the first in line to receive things always have priority. So, your spouse, who in the vast majority of states has a claim to everything that you own, will almost always get to keep your estate if he or she outlives you.
Think about the consequences of this if you and your spouse are separated but have not gotten around to filing the divorce papers. It could mean that your estate ends up going to your wife’s new significant other while your kids do not get the much-needed access to funds. Luckily, one of the first things that a lawyer or accountant will require you to do is prepare a will. This document will demonstrate the proper priority that people in your life will have when it comes to distributing assets. It will also be a great way for you to communicate your reasoning behind the asset and capital distribution that may not seem too obvious to your family members.
Reduce Tax Liability
The next advantage, which is almost equally as relevant, pertains to tax savings that estate planning will bring. While this mostly concerns individuals who have a high net worth, as per Regan Rohl, you should look into the details, nonetheless. Failing to do so could mean that you put a substantial tax burden on your family who has to pay for everything that you left them. Given how a simple strategy like the use of trusts can help sidestep these expenditures, not getting educated on the matter would be an enormous mistake.
Avoid Family Drama
Due to the emotional rollercoaster that your loved ones will go through once you die, letting them deal with the drama of asset proportioning seems quite cruel. Just like you would not want to have the state assign your belongings to someone, you should also use your estate planning to appoint a probate attorney or another person who will represent you during the proceeding. These individuals will have the authority to make decisions on your behalf when you are no longer around.
So, you should try to find someone who knows your situation well and understands what your underlying goals are. By doing that, your children or siblings will not have to spend much time arguing about being treated unfairly as all of their concerns will be answered by your representative.
Get Protection from Lawsuits
If you work in a field that has a high rate of death-related lawsuits, you should consider estate planning just to gain some protection. For instance, if someone sues you after you die, they will be coming after your estate. In other words, they will be trying to take assets that now belong to your loved ones, and you must establish some basic coverage that consists of a solid legal team and a plan of action.
Hypothetically speaking, merely having a neatly laid out strategy that instructors your attorneys on the proper course of action in cases of lawsuits will be incredibly advantageous. To understand why, just consider the opposite alternative. Not being prepared means that your loved ones have to find some form of legal representation quickly and deal with the lawsuit that they were most likely ill-prepared for.
Some other significant advantages include keeping your estate out of the probate process, appointing a knowledgeable conservatorship, getting to donate to the organizations that you like, and more. The aforementioned few, however, are the most important starting points as you begin the estate planning process.
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