Many people have difficulty deciding if they need an estate plan. Whether you have substantial or modest assets, formally documenting your wishes concerning their distribution is a good idea for the following reasons.
Asset Protection
Asset protection trusts are an excellent solution for individuals at high risk of being sued due to their professions. Doctors, lawyers, and business owners are among those who can benefit from these trusts, which are generally off-limits to creditors and exempt from lawsuit settlements.
Dependent Health Care
Many people want to continue providing care for their loved ones. Ongoing care can be of particular concern to anyone with a disabled or elderly relative. An estate plan that includes an irrevocable trust in the name of a disabled beneficiary can reserve funds specifically for that person’s care and living expenses.
Minor Child Care
If you have children, estate planning is essential. For example, creating a will can allow you to designate specific individuals to raise your children in case of your death. Otherwise, the court system will have the sole authority to make that decision. If possible, you can also establish an irrevocable trust that can fund specific essential items of importance to you, like your children’s education.
Avoid Family Fights
Some of the most heated family arguments arise over the distribution of estates. You can avoid these future battles by creating a will or trust that specifies how you would like to distribute your assets. Establishing instructions will allow you to retain control and, despite risking hurt feelings, you can ensure your final wishes are followed.
Avoid Probate
Consider establishing an irrevocable trust if you want your family to avoid going through protracted, public and costly probate. These trusts require you to relinquish control of your assets to a trustee that safeguards them for your beneficiaries. They also ensure the exact amount and manner of distribution according to your wishes. In general, asset distribution occurs immediately.
Reduce Tax Burdens
If you intend to leave as much of your estate to your heirs, estate planning can help you achieve that. Many beneficiaries find themselves saddled with hefty taxes that can eat into their inheritance, diminishing it substantially. A knowledgeable lawyer, like an estate planning lawyer can advise several options, including gifting your beneficiaries cash amounts from your estate up to your state’s tax-free threshold while you are alive.
If you have someone that you would like to provide for after your death, having a thoughtful estate plan is essential.
