If you need to be convinced that estate planning is not just for the wealthy, here’s something to consider. Without a will, the state makes the decisions about who receives your assets when you die and who raises your child. With no medical directive in place, your loved ones won’t get to say what kind of end-of-life care you get.
There are many reasons to put an estate plan in place: your loved ones and your own wishes chief among them. As reported in Investopedia’s recent article, “4 Reasons Estate Planning Is So Important,” there are four key reasons why everyone needs an estate plan.
- An Estate Plan Keeps Your Assets from Going to Unintended Beneficiaries. Families need to plan in the event something unfortunate happens to a family's breadwinner(s). A primary part of estate planning is choosing heirs for your assets. Without an estate plan, a judge will decide who gets your assets. This process can take years and can get heated. There’s no guarantee the judge will automatically rule that the surviving spouse gets everything.
- An Estate Plan Protects Your Young Children. If you are the parent of minor children, you need to name their guardians, in the event that both parents die before the children turn 18. Without including this in your will (in most, but not all states), the courts will make this decision.
- An Estate Plan Eliminates a Large Tax Burden for Your Heirs. Estate planning means protecting your loved ones—that also entails providing them with protection from the IRS. Your estate plan should transfer assets to your heirs and create the smallest tax burden as possible for them. Without a plan, the amount your heirs will owe the government could be substantial.
- An Estate Plan Reduces Family Headaches After You’ve Passed. There are plenty of horror stories about how the family starts fighting after the death of a loved one. You can avoid this. One way is to carefully choose who controls your finances and assets, if you become mentally incapacitated or after you die. This goes a long way towards eliminating family strife and making certain that your assets are handled in the way you want.
The reasons to have an estate plan are really very simple. This is how you protect your family, your property and yourself. Think of it as another way to demonstrate how much you love your family. If you don’t have a family, think of it as a way to create a legacy for the causes or people who are important to you.
Reference: Investopedia (May 25, 2018) “4 Reasons Estate Planning Is So Important”