The Basics Of Estate Planning: 4 Reasons To Plan Early
Planning your estate early isn’t a new thing. Estate planning refers to the preparations that’d take place regarding how to manage your assets when you pass away. This includes who gets to inherit your assets and how to settle estate taxes.
With an estate plan, you can ensure your hard work won’t go to waste but will go to the person whom you want to inherit it. For more elaborations on the reasons why you need to plan your estate early, keep on reading.
1. Estate Planning Can Save Time And MoneyWhen you pass away without planning your estate, you’ll be leaving all your assets under the state’s care. This means the state decides what to do with all of your assets through a probate proceeding. The probate court will assign a representative who’d dispense your properties. If you have a living spouse, then they’ll be in charge of the responsibility. However, suppose you have no close family who’s willing to take on the responsibility. In that case, the court will assign a public trustee who’ll administer your estate.
During this period, all of your assets will be frozen. No one can use or touch your assets until the court has finished going through every detail and information about your properties. Also, during this period, the court will look at your properties and compare them to state laws, paying off your debts before deciding the manner of allocation.
The probate process takes a lot of paperwork and multiple court appearances, all of which are paid by your estate. Most probate processes can take up to several months or even years. Apart from being time-consuming, the legal bills can eat up most of your estate, only leaving a certain amount to your surviving family.
However, you can mitigate all these problems by having an estate plan. Included in your estate plan is the will that identifies the executor of your estate and the beneficiaries of your investments accounts, including IRAs, 401(k)s, and other brokerage accounts. With the help of Weiner Law and other estate law professionals, you can include all of these in your estate plan.
2. You Can Assign Who Inherits Your AssetsEstate planning shouldn’t be limited to the rich. Even middle-class families have some things to leave behind. That could be a house, stock portfolios, real estate properties, or even family heirlooms. Whatever it may be, your belongings fall under your estate.
If something were to happen to you, you should be able to designate which property goes to whom. The responsibility should go to you and not your living family or even the court. This way, you can make individual plans for each member of your family.
Perhaps you want to give more to your child who has health problems or a family member who cared for you the most. Whatever it is, personalizing your estate plan is crucial in making sure you take care of everyone you love even after your death.
3. An Estate Plan Eliminates Family MessesWhen you’ve planned what your loved ones will receive, you can avoid family messes. Families left with money to share but without a clear direction on which portion to get could end up fighting. One family member might think they deserve more, and another might want to be the head in terms of handling finances. Such disagreements are more common than you might think.
Nipping the bud of a potential quarrel before it starts is an excellent reason to begin planning your estate now. When you start planning early, you can rest assured that your family won’t be going against each other during the time of your demise.
4. You Can Minimize Transfer TaxesMost importantly, transferring wealth can incur a lot of tax fees if you’re not wise. Planning your estate early on allows you to look at multiple approaches and see which one is the most tax-efficient. Three types of taxes could come your way when you transfer your wealth to other people—estate tax, gift tax, and generation-skipping tax.
The IRS places a limit on the tax-deferred money you can give to your loved ones. So, it’s important to strategize your plan to lessen the tax you’ll be paying for as much as possible.
ConclusionIt's best to have an estate plan when you have an asset you could pass to your loved ones. That way, they can benefit from it in case of your demise. Instead of letting the state take care of your assets, delegate someone to do it. By doing this, your estate won’t go to paying the costs of a probate process. You’ve earned your assets, and it’s only essential to decide on what will happen to them.
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