Estate planning is extremely important for everyone, regardless of the available assets and yet nearly 60% of Americans fail to begin the process by writing a will. Part of it is a fear or avoidance of thinking about the end, and part of it is the belief that there is no point if you are not particularly wealthy with many assets.
The truth is estate planning is useful for all people, and it is not only about what happens after you die. It also includes issues such as your power of attorney or health care surrogate, so you can make sure the right people are making the health decisions for you. Failure to take such precautions can be devastating, and lacking an after-death plan can easily create feuds and rifts between your loved ones. Here are three reasons that estate planning is important.
Family feuds are a nightmare but are much more likely to happen if you don't specify beneficiaries for your assets. Without a written will or plan, the probate court process can be long and frustrating. Do not assume that assets will be distributed fairly or the way you imagined if you do not have an estate plan. Once again, this also applies to medical issues before death as well. Having your personal medical decision-making inadvertently assigned to someone who holds a grudge or never had your best interests in mind can go very badly. The best way to prevent conflict is to have an estate plan in place. It can be very basic or more complex, and cover as little or as much as you like.
Reducing Or Eliminating Taxes
Taxes can take a huge chunk out of your estate, leaving little left for your beneficiaries. Proper estate planning can reduce or sometimes even eliminate the massive tax hit. Meeting with a financial advisor and an estate planning attorney is a good idea as both can guide you on the best ways to reduce the tax burden your beneficiaries may face. The federal estate tax exemption is pretty high for those who are not particularly wealthy, but state taxes may also apply. Through the use of certain trusts and other actions, you could be well on your way to saving others from the headache of inheritance taxes.
To Leave A Charitable Legacy
If you've ever considered donating a portion of your wealth and assets to a beloved charitable organization, an animal shelter, or even forming a philanthropic foundation, as estate plan is one of the only ways of ensuring this will happen, just as you planned it. Your estate plan will be capable of appointing those who will run your foundation after your death and continue on your legacy of philanthropy. Your plan will be a safeguard against those who do not have your best interests and legacy goals at heart. Forming a foundation before your death is also an option, and is arguably the better choice to avoid the potential for surprise and overwhelming the designate. These are not the only options available as far as leaving a legacy is concerned, but they are certainly the more popular choices for charitable individuals.
Planning for your estate is a much more involved process than most people are aware of. The expectation that you can always do it "later" can be a costly one when later never truly comes. Depending on the courts to decide who is in charge of handling your estate is risky, and may not turn out the way you assume it will. The best way to protect yourself, your legacy, and your chosen beneficiaries from unnecessary problems is to undertake estate planning as soon as you can, even if it is only the creation of a simple will. Contact our team at BD Financial Concepts for estate planning services aligned to your goals.
Advisory services offered through J.W. Cole Advisors, Inc. (JWCA)
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