Whenever you run across the term estate planning, you might think of it as something only rich people with yachts and luxurious properties need to worry about. The truth is that you might need to have an estate plan in place as well, though.
Only one out of every three Americans addresses their estate plan needs. No matter the size of your income or net worth, estate planning is a prudent and practical step that ensures your assets are handed down the way you want after you pass away, preventing potential conflicts among your loved ones.
Keep reading to learn more about how estate planning should work and its importance.
What Is Estate Planning?
Estate planning is an essential process that empowers you to make critical decisions about the future distribution of your possessions and the management of your care and assets in the event of incapacity or death.
Practically every person has an estate. An estate includes your real estate, personal possessions, financial securities, and cash, among other physical and intangible assets.
Why Is Estate Planning Important?
At the core of estate planning lies an understanding of your vision of how you want things to play out if you become disabled or upon your death. The legal industry likes to say that you need to have certain documents, like a will or a trust, in your plan, but without knowing what you see as the result you desire, we really can’t advise you on the strategy to accomplish it!
Documents are simply tools of the trade. It is what you do before and after the documents that produces the results!
These are some of the main reasons why estate planning is important:
Can Minimize Tax Burdens
“Nothing is certain but death and taxes.” Those famous words couldn’t be more accurate than when sorting out your estate plan. Commonly referred to as death taxes, the estate tax is levied on the assets of a deceased individual. There is a federal and state estate tax, so there can be more than one to consider. Often, “conventional wisdom” solutions may create income tax concerns. However, with careful estate planning, you can strategically minimize or even eliminate death tax while minimizing the impact on income taxes, allowing your chosen heirs to inherit a larger portion of your estate.
Saves Time and Money
A comprehensive estate plan includes a detailed inventory of your assets and obligations, encompassing all open accounts and financial information. If you die without a comprehensive estate plan in place, your loved ones may face significant challenges and uncertainties.
An estate plan will enable you to transfer your wealth to your heirs without the need for court supervision. When we ask, our clients say that keeping their accounts and their heirs private is important to them. Your estate plan can avoid the public display of your account numbers and the personal information about your heirs that is required through the court-supervised process of probate.
Gives You the Power of Decision Making
Estate planning extends beyond the realm of finances. It also encompasses arrangements for your medical care and decision-making if you become incapacitated and unable to make these choices for yourself.
By including provisions such as an Advance Directive for Health Care and incorporating the functions of a durable power of attorney for healthcare and a living will into one document, you can designate trusted individuals to make medical decisions on your behalf and outline your preferences for end-of-life care. You can also make decisions about how you wish to be cared for if you aren’t at the end of your life but are disabled and unable to communicate at that time.
Estate planning serves as a means of putting your affairs in order, ensuring that your loved ones can efficiently take over when you pass away. Consulting with an experienced estate planning attorney is crucial to navigating the complexities of the process. At Edward S. Clay, P.A. Law Offices we will help you to create an effective estate plan that will adapt to changes in your life and put you in the best position to achieve your results. Don’t wait any longer! Contact us today to learn more about your estate planning options.