With an estate plan, you can distribute your assets according to your own wishes. Without one, your heirs may spend years and a good deal of money trying to settle your estate, reports U.S. News & World Report in the article “5 Reasons to Make an Estate Plan.”
If there is no estate plan in place, including a will, living trust, advance directives and other documents, people you love will be put in a position of guessing what you wanted for any number of things, from what your final wishes would be in a medical crisis, to what kind of a funeral you would like to have. That guessing can cause strife and worry between family members that they didn’t do what you wanted.
What is estate planning? Estate planning is the process of legally documenting what you want to happen when you die. It also includes planning for your wishes in case of incapacity, that is, when you are not legally competent to make decisions for yourself because of illness or an injury. This is done through the use of wills, trusts, advance directives and beneficiary designations on accounts and life insurance policies.
Let’s face it, people don’t like to think about their passing, so they postpone making an appointment with an estate planning attorney. There’s also the fear of the unknown: will they have to share a lot of information with the attorney? Will it become complicated? Will they have to make decisions that they are not sure they can make? Rest assured, there is no need to fear speaking with an estate planning attorney or procrastinate in making an appointment. Estate planning attorneys are experienced with the issues that come with planning for incapacity and death, and are able to guide clients through the process.
The power of memorializing your wishes on paper can provide a great deal of relief to the people who are making the estate plan, as well as their family members. Here are five reasons why everyone should have an estate plan:
Avoid Probate. Without a will, the probate court may decide how to distribute your estate. In Illinois, it can take months to administer the estate and allow creditors to put through claims. The estate is also public, with your information available to the public. Probate can also be expensive.
Minimize Taxes. There are a number of strategies that can be used to minimize taxes being imposed on your heirs. While the federal estate tax exemption is $11.4 million per individual, states have estate taxes. An estate planning attorney can help you minimize the tax impact of your estate.
Care for Minor Children. Families with minor children need a plan for care, if both parents should pass away. Without a will that names a guardian for young children, the court will appoint a guardian to raise a child. With a will, you can prevent the scenario of relatives squabbling over who should get custody of minor children.
Distributing Assets. If you have a will, you can say who you want to get what assets. If you don’t, the laws of your state will determine who gets what. You can also use trusts to control how and when assets are distributed, in case there are heirs who are unable to manage money.
Plan for Pets. In many states, you can create a Pet Trust and name a trustee to manage the money, while naming someone in your will who will be in charge of caring for your pet. Seniors are often reluctant to get a pet, because they are concerned that they will die before the pet. However, with an estate plan that includes a pet trust, you can protect your pet.
Reference: U.S. News & World Report (October 18, 2019) “5 Reasons to Make an Estate Plan”
Suggested Key Terms: Estate Plan, Pet Trust, Asset Distribution, Beneficiaries, Minor Children, Guardian, Probate