In 2020, the Covid-19 pandemic had many of us thinking about what would happen to our family if we caught the illness. These thoughts pushed us into action, and since the epidemic began, the number of young people creating wills has increased by 63%, according to Caring.com’s Will Survey. If the past year has taught us anything, it’s that planning, including estate planning, is necessary.
Benefits of Estate Planning
Estate planning is preparing documents that are effective both during and after your lifetime. Planning includes writing a will, setting up a certificate of trust, and making donations to limit your estate taxes. It also includes naming an executor and beneficiaries and setting up your funeral arrangements.
Avoids Future Family Arguments
A clear estate plan can help your family remain civil after your death. All too often we see families fighting over who gets the house and who gets your jewelry when you pass. While your family may not be prone to fighting, there’s no way to look into the future to see how grief will affect your family. These family disputes can damage your children’s relationships with one another.
A clear estate plan can help your family avoid fighting over money because it details where and to whom your assets will go. When you’re alive, you can decide who will be receiving what in your family, making them unable to fight (at least legally) with one another when you pass away. This also gives you the chance to discuss with your children why you have made these decisions.
Helps you Maximize Tax-Free Transfer Allowances
Your assets, when transferred after your death, may be subject to estate taxes. While the threshold for these taxes is high, you never know what the future holds or how much they’ll be reduced by the time of your death.
Luckily, you can still pass on assets to your children tax-free when you’re still alive. The earlier you do this, the better you can take advantage of tax-free allowances.
Quicker Probate Process
After you pass away, your estate plan will be filed in probate court. Probate court can take a considerable amount of time if you don’t have an estate plan or a will. Your estate plan or will details everything that the probate court needs to know when it comes to the distribution of assets. If you don’t have this plan, the probate court will have a more difficult time distributing your assets to your heirs, which means that your family will have to wait longer before they see any money.
An estate plan can make the probate process quick and help some, if not most, assets avoid probate court altogether.
Allows You to Donate to Your Favorite Causes
If you want to give some of your money to charity after you pass away, you can name the charity and the amount you wish to give away in your will and/or estate plan.
Keeps Your Children Safe
If your children are not adults and you pass away, there’s no guarantee of what will happen to them. Consider very carefully who will take care of your children when you pass away. If you don’t have an estate plan or even a will, you have no control over their future. Without the right legal plan in place, they could end up in Child Protective Services while the court determines who will become their guardian.
Instead of leaving that decision up to the courts, you can decide who will raise your children in a worst-case scenario. Make sure that you and your spouse weigh your options carefully. Once you determine who will be the guardian, make sure that you discuss it with that person and let them know everything that will be expected of them.
Makes Retirement Easier
While estate planning might seem like it’s all about what happens after you pass on, it can benefit you while you’re still alive. Estate planning can help you when it comes to healthcare by ensuring that you’re eligible for government benefits, including Medicare. These programs can significantly reduce your costs so that you’re able to leave more money to your family.
Plans for More Than Death
Estate planning and creating a will can also help you plan for the unthinkable: incapacitation. You can’t anticipate everything that could happen to you, including accidents or sudden medical events that can leave you incapacitated. If you ever become unable to manage your financial affairs, your estate plan can help.
A power of attorney for your financial and healthcare decision can save your family time, money, and a lot of emotional distress. An estate plan ensures that everything– from your money to your wishes– is handled according to your wishes and no one else’s.
Takes Care of Your Needs
Estate planning is mostly about taking care of the people you love when you pass on. However, it can also benefit you. You may think of a will as something you only need when you pass away, but it can also protect your assets while you’re still living.
If you do become incapacitated or can no longer make decisions for yourself, an estate plan helps to protect your assets from others. You can designate a proxy or power of attorney who will make your medical and financial decisions if you’re unable.
Creating an Estate Plan: Involve the People You Care Most About
When you’re beginning the process of developing an estate plan, make sure that you let your loved ones know, especially if you include them in your will or estate plan. It’s important to talk about these things with your family beforehand to prevent future arguments between children and so that everyone knows that they won’t have to deal with even more stressors in a time of grief.
When it comes to who will take care of your children if you pass away, make sure that you choose someone close to the family who accepts this responsibility. While it might seem unlikely that you will pass away when you’re still young, you can’t always predict the future. Luckily, with an estate plan, you can plan for it.
This essay should have given you some new and useful knowledge. For more helpful tips for providing for your family, visit this post: Tips for Keeping Your Home and Family Safe during the Holidays
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