Far too often, estate planning stays at the bottom of the to-do pile, and because of that, surviving family members are left with an estate to untangle and questions to answer. For some families, the lack of an estate plan can lead to years of court appearances and loss of money. But it doesn’t have to be that way. Today, let’s talk about 11 reasons why estate planning is useful and why you shouldn’t put it off.
11 Reasons Why You Should Start Estate Planning Now
First, let’s define “estate plan.” An estate plan is the process of anticipating and managing financial, medical, and guardianship issues that will arise after your death or if you become incapacitated. Think of estate planning as a road map for your family, giving them a clear vision of how to care for your health, possessions, assets, children, pets, and more.
The most common estate planning documents to consider are the financial power of attorney, medical power of attorney, living will, legal will, revocable living trust, and funeral plan.
Not every reason on this list will apply to you, but if even one reason connects to your life, then it may be time to put together an estate plan.
1. Protect Your Minor Children
If you have children under 18, an estate plan can be essential for their care if something should happen to you. By completing certain documents, you can designate a guardian and set aside an inheritance for children’s future. Without a plan in place, children may go through foster care or experience a period of instability on the way to a permanent home. By completing a few documents, especially a legal will, you can provide for your children if anything unexpected occurs.
2. Outline Future Care for Pets
Pets are family members, too, and to guarantee their well-being after your passing, you can include them in your legal documents. When a pet’s care is left unaddressed, it’s possible that they may be dropped off at a shelter or humane society rather than taken in by a loving family. To protect your pet’s future, consider taking steps to ensure that they go to a happy and healthy home should anything happen to you. To learn more, read Protect Your Pet: 4 Steps to Create an Estate Plan for Your Pet.
3. Minimize or Prevent Family Disagreements
All of us know that money can make people a little bit crazy. Sometimes it’s easy to tell who will cause problems, and other times, it’s not. By putting together an estate plan, you can significantly minimize or completely prevent any squabbles amongst your surviving loved ones. An estate plan will clearly outline your wishes regarding who gets what, when they get it, who’s in charge, and more. And because the documents are legally binding, any difficult people will have to go along with it.
4. Specify How Your Assets Should Be Distributed
You might say, “I don’t have a lot of money. Why do I need a will?” The word “assets” refers to much more than just money. It’s your car, your house, your accounts, and your cherished heirlooms, to name a few. All of these items belong to you, and you should be the one deciding what happens to them after you’re gone. If you don’t have an estate plan, it’s often up to state law to determine what happens, and your family may or may not benefit. By completing a few documents now, you can ensure everything goes to the right people.
5. Avoid Probate Court and Preserve Privacy
For some families, a revocable trust may be an excellent option because it allows you to skip the costly and timely probate court process. At probate court, the legal will is authenticated, and a plan is set to pay bills and taxes before distributing to the rightful heirs. It can be a complicated process, especially if someone decides to oppose the will. However, with a trust, you can completely avoid probate court and appoint your own executor, who will take care of everything privately and out of the public eye.
6. Choose a Trusted Estate Executor
An executor is the person who carries out the desires and directives you’ve written in a legal will. You can designate someone you trust as executor, but if you don’t have a legal will, everything will fall to the state. The state-appointed executor will then decide what to do with your assets and property. While they will follow state law, the end results may not benefit your family. However, by completing an estate plan and choosing an executor, you can avoid this unnecessary complication.
7. Manage or Minimize Estate Tax Issues
Another reason to set up an estate plan is to manage or minimize taxes associated with state/federal estate tax laws or inheritance laws. Without a plan, these taxes could significantly affect what’s left for your heirs. However, you can reduce the tax on your overall estate when your estate plan is properly structured. It’s best to speak with an estate planning attorney to discuss the right options for your particular estate. With their help, you may be able to legally avoid expensive taxes that can negatively impact your estate.
8. Document your Medical Care Wishes
Not to be confused with a legal will, the living will is a document that outlines your medical care wishes should you become incapacitated. In this document, you provide guidance on which medical procedures you are okay with and which you aren’t. For example, some people may include DNR (do not resuscitate) orders in their living will. The biggest benefit to completing a living will is that you provide family members and doctors with a comprehensive understanding of your wishes so they can make decisions appropriately.
9. Avoid a Guardianship Appointment
A power of attorney (POA) allows a designated representative to legally act on your behalf. This means that they can make financial or medical decisions, pay bills, and sell property, to name a few. However, if you become incapacitated and don’t have a POA, it’s possible that no one (including your spouse) will be able to act for you. In this event, the court must appoint a guardian for you, which can be an expensive and lengthy process. However, with a POA in place, your loved ones can make decisions on your behalf with ease.
10. Arrange for Charitable Gifts
If you’d like to support an organization or charity by leaving a charitable gift (or bequest), then you’ll want to use your estate plan to set everything up. There are ways to designate certain finances to go to a specific organization, and when properly structured, you can do so without losing much to taxes. If you plan to give a large amount or would like to create a new scholarship fund at an institution, reach out to the organization itself first. Their knowledgeable staff will help you navigate all the steps.
11. Give Everyone Peace of Mind
And last but certainly not least, completing an estate plan will give you – and your survivors – peace of mind. Creating an estate plan takes time and can be a bit stressful. Imagine having to do everything after a loved one has already passed away and can no longer answer questions or give opinions. It’s one more stress added to an already difficult time of loss. Instead, by putting in the work now, you can give everyone peace of mind and remove a future burden from your loved ones’ shoulders.
Why Is It Important to Plan Now?
In short, the most compelling reason why you should start putting your estate plan together now is that none of us know the length of our days. For many of us, it will be decades before there’s even a hint of a health problem. But for some, an accident or a diagnosis can come without warning and much too early.
Because the future is unknown, take the time now to protect your children, your pets, and your assets. Without your forethought, there’s no telling what may happen after you’re gone. It’s never too early to put together an estate plan, but it can be too late.
To begin preparing a comprehensive estate plan, make an appointment with a local estate planning attorney or look online for resources in your area. While it will take time to put everything together, your family will be so grateful in the end.
Additional Estate Planning Resources
- How to Make an Estate Planning Checklist
- 7 Questions to Ask When Estate Planning with Dependent Children
- The 5 Most Important Estate Planning Documents
- How to Make Digital Estate Planning Simple
- What is Advance Funeral Planning?
DISCLAIMER: Individual circumstances and state laws vary, so any estate planning should only be undertaken with the help and assistance of an attorney licensed in your state.
