Do you have an estate plan? According to a survey by Caring.com, only 42% of adults have one. An estate plan is a collection of documents that specify how you wish your assets to be distributed once you are gone. Many people think that estate planning is reserved for the super-rich. But this is not true. It can be done by anyone, regardless of your financial status or family dynamics. If you are still on the fence, here are 6 major reasons you should have an estate plan.
- To Control your wealth
The most obvious reason you should have an estate plan is to prevent your wealth from going to unintended beneficiaries in the event of your death. If there is no estate plan, for example, in the form of a living trust or a Will, your wealth may be distributed in counterproductive ways. An ex-spouse with whom you had a bitter divorce, for instance, may appear out of nowhere to claim your property. Proper documentation clearly defines how your assets will be transferred upon your death. This will save your family unnecessary frustrations and your assets will be distributed according to your wishes.
- To avoid probate
Probate is a judicial process of registering and proving the wishes of the deceased person. Probate cases automatically become public record, meaning that they can be accessed by virtually anyone. A probate court can expose your public value to acquirers and business competitors, consequently undermining your dedicated years of vigilance. Similarly, a probate process can cause an air of awkwardness among your loved ones by publicizing your finances.
- Philanthropic goals
An estate plan is a good way to ensure that your philanthropic goals are implemented according to your requirements. A proper estate plan usually includes legacy planning. If you wish to start a family foundation, take part in a donor-advised fund or create a charitable trust. You can easily incorporate these goals into your estate plan.
- Avoid huge taxes and fees
Estate planning can help you minimize or avoid certain fees and taxes that come with inheritance. There are limits around the amount of money you can transfer without being taxed. A good lawyer can help you come up with an effective wealth transfer strategy that will see a significant reduction in the payable taxes charged to your beneficiaries.
- Protect family wealth
As your wealth grows, you tend to become more susceptible to frivolous court cases. Estate planning helps protect your family wealth by putting your assets in limited liabilities, trusts, and other legally protected entities. Some insurance policies can also protect you from unwanted lawsuits or increase your estate by providing additional funds.
- To avoid conflicts
Unless you have been living under a rock, chances are you know at least one family that has been divided irreversibly because of inheritance money. One famous feud is the inheritance of H.L. Hunt’s $8 billion estate, which led to the disinheritance of the first great-grandson and the eventual sale of the primary asset – Hunt Petroleum. These squabbles can be easily avoided by drafting a clearly-detailed estate plan. In case you become incapacitated, you will have to designate someone to control your wealth.
Once you have created your estate plan, it is imperative that you update your documents according to your current circumstances. If you need an experienced estate planning attorney to guide you through the legal complexities of the process, you can count on Tanika L. Finney. Call now at 334-246-4170 to get started.