An estate plan is a process of arranging the management and disbursement of a person’s possessions upon their death. Only 42 percent of Americans have estate planning documents like a will or living trust. Contrary to popular belief, establishing a will is not something solely for the wealthy. A comprehensive estate plan will not only secure your assets, but protect your beneficiaries from unnecessary fees, income tax, and stress. Continue reading to learn why estate planning is important to not only you but your loved ones as well.
4 Reasons Why Estate Planning is Important
Estate planning is much more than just establishing a will or trust for your beneficiaries. Essentially, an estate plan solidifies that your assets will be transferred according to your wishes upon your death, and allows appointed family members, or an estate planning attorney, to oversee your medical and financial decisions should you become incapacitated. Here’s why estate planning is essential.
Avoid Probate Court
If you pass away without an estate plan, your family may have to go through probate court to obtain your living assets. Not only is probate court a lengthy legal process, but it’s also expensive. After your loved ones pay court fees and attorney’s fees, there may be little left for them to enjoy or invest. Taking the time to create an estate plan now will undoubtedly pay off for your family in the future.
Establishing an estate plan ensures that your wealth will go where you want. In your living trust, be sure to outline the people and organizations that you plan to gift with your money. With this financial plan in place, you can rest assured knowing your wishes will be carried out. If you die without establishing an estate plan or naming a beneficiary, a probate court will be left to allocate your funds.
Reduce Estate Taxes
Setting up an estate plan can save your loved ones from federal estate taxes from the IRA and IRS. Tax laws require living family members to pay taxes based upon the value of the distributed assets of the estate. If a loved one receives a portion of the estate totaling over a specific value, they will have to pay an inheritance tax on the amount. Setting up a disbursement plan within your estate planning documents can help avoid these issues. This way, your estate annually distributes so that you can avoid taxation on your financial gifts to your designated beneficiaries.
Ensure Health Care Decisions
You may want to include a healthcare power of attorney in your estate plan. This designated individual will make decisions regarding your health if you become incapacitated. Determining who you should appoint as your power of attorney is no simple task. Think about who you feel comfortable with making medical decisions and financial decisions on your behalf, as this person could potentially have your life in their hands.
At Solomon, Steiner & Peck, we understand that no two families are alike. Therefore no estate plans will be the same. Our team of experienced estate planning attorneys and paralegals have been providing practical legal solutions to families throughout Ohio for over 20 years. Give yourself peace of mind and contact us today for more information on estate planning.