Three (3) Reasons to Plan Your Estate
Estate planning is an essential part of creating financial stability. An estate plan helps your family and friends understand your wishes, and it assigns beneficiaries while you are living and after your death.
Many people shy away from estate planning because they assume that estate planning is only for the rich. However, that is not true. Everyone needs an estate plan. Below are three important reasons why you should create an estate plan for the new year.
1. Name your beneficiaries early.
A beneficiary is a person who is legally entitled to receive the benefits of your estate, such as money, assets, clothes, or whatever else the benefactor (the person who writes the estate plan) lists in his or her estate plan.
When you are planning your estate, you control who receives your assets. If you don't have a family member or friend you'd like to leave your assets, there are other options. You can leave your assets to your pet, a charity, or anyone else you feel is worthy of receiving your property. Whomever you may choose, the beneficiary should know about your plans ahead of time so that they can adequately plan to care for your assets.
2. Eliminate the time-consuming legal battle.
An estate plan will eliminate (or minimize) the courts being involved with your estate plan and the distribution of your assets. When you don't have an estate plan and have transitioned or can't physically take care of yourself anymore, the courts will assume where or to whom your property should be given. Without having an estate plan, it can cause a time-consuming (and costly) legal battle, either between family members or with the courts. Your estate plan will help guide your loved ones (and the courts) on how to handle your assets when you have transitioned.
3. Reduce the amount of taxes your beneficiaries may owe.
When you plan out the distribution of your estate, keep in mind that you and your heirs should know about several types of estate taxes. It is highly recommended that you sit down with an estate planning attorney to research the taxes associated with your estate and create the most feasible plan to reduce the tax burden on your heirs. A few taxes that are generally associated with an estate plan are federal and state estate taxes, income tax, and inheritance tax.
Talk with an estate planning attorney to ensure all bases are covered when you fill out and complete your estate plan.