You plan for a lot of things in life, like vacations, choosing which car to buy and even buying a house. However, many people don’t consider estate planning. Estate planning decides who will inherit your assets after you pass away, and holds a lot of value. It might not be as fun to think about as your next vacation, but estate planning is necessary to ensure your belongings go to the right people or places.
Estate planning may sound like it’s just for the wealthy, but everyone should have an estate plan. Without settling your affairs, your loved ones can be negatively impacted after you pass away. Here’s why estate planning is important at any age.
End of life planning is necessary for all people, especially those with families. It’s not just about who gets what, but helps create a plan to decide who will be in charge of everything from typical household activities, to paying taxes. Even if you’re not leaving much behind, if you don’t decide who receives what you do have, you won’t have any control over what happens to it.
For example, you can’t just assume that your home will be handed down to your children if you pass away. An estate plan is the only way to guarantee that everything you leave behind is left to your loved ones, and allows you to ensure their protection.
The main component of end of life planning is choosing the heirs for your assets, whether it’s your house or your favorite vase. Without this plan, the courts will decide who gets your assets, which can be a long and ugly process that can hurt your loved ones and their relationships with one another.
A will specifically names who gets your assets, so it’s important that you create one as soon as possible to make sure your family gets everything they need.
Protects Young Children
While you don’t want to consider what will happen if you die young, you need to think about the future. If you’re the parent of an underage child, you need to prepare yourself and them for what’s to come if you pass away. To ensure that your children are cared for the way you want them to be, you will name guardians who will take over custody if both parents were to pass away before the children are over the age of 18. Without naming these individuals, the courts will determine who will raise your children.
If you have anyone specific in mind who you think would be a good guardian to your children, talk to them about it to make sure that it’s something they are comfortable with. Many parents choose to name godparents for their children within their extended family, but this can also extend to friends or other loved ones. However, unless these individuals are specifically mentioned in your estate plan, then you cannot guarantee that these will be the people to take care of your children if you pass away.
Prevents Heirs From Paying Hefty Taxes
Estate planning is all about ensuring the protection of your loved ones, which can mean helping them save money. When you transfer assets to heirs, there will be a tax burden on them. However, with the right planning, you can lessen the amount they’ll pay on taxes when transferring your assets. To help with your taxes, you can use an easy-to-use, professional tax software.
Eliminates Family Drama
We’ve all watched the horror stories unfold on our favorite soap operas, but nobody wants to experience family drama due to a lack of an estate plan in real life. When someone with money or assets dies, family members typically start a war between one another. One sibling may believe that they are entitled to more than everyone, while another believes they should be the one in charge of the finances.
This type of fighting can get ugly quickly and end up in court with your family members pitted against each other, forced to choose sides.
An estate plan enables you to stop the fighting before it even begins. You are the one in control of where your finances and assets go if you become incapacitated or pass away. This can help you avoid family drama and keep your loved ones from fighting.
Saves Time and Money
If you pass away without an estate plan, the laws where you live will determine what happens to your estate. Probate court will name a representative to make sure your assets are distributed. This job typically goes to the surviving spouse, but if you don’t have one and no family member is willing to take on the task, the court will name a public trustee.
During this period, no one will be able to touch your assets or carry out any of your directives. Everything is essentially frozen until the court figures everything out. This probate process involves paperwork and court appearances, which means your loved ones will be spending valuable time away from their jobs and families to make sure your affairs are settled.
Estate Planning Ensures Your Safety
Estate planning doesn’t just mean drafting a will for after you pass away. In fact, it can take care of you while you’re still alive. An estate plan can include a power of attorney (POA) and healthcare proxy that ensure your wishes are fulfilled if you become incapable of fulfilling them yourself. Power of attorney designates someone who is authorized to handle your legal and financial affairs when you can’t, while a healthcare proxy is someone who can make healthcare decisions for you.
Without this living will, determining who among your family members can take care of these important duties can get difficult. The court might have to appoint someone who is unfamiliar with your wishes to make decisions for you.
While you may be young now, you never know what the future holds. If you have young children, you should at least have a will drafted to ensure their safety and protection. Whether you’re married or single, having an estate plan can help you and your loved ones in the future.
Estate planning also gives you a sense of control over your property, which can be taken by the state if there’s no one to give your assets to. As someone who might be single, an estate plan gives you the power to give your assets to a friend or charity instead of the government.
Matt Casadona has a Bachelor of Science in Business Administration, with a concentration in Marketing and a minor in Psychology. Matt is passionate about marketing and business strategy and enjoys San Diego life, traveling, and music.