Used synonymously with wealth preservation planning, estate planning involves anticipating the future and making arrangements regarding your assets that will take effect upon your passing.
An estate plan typically consists of wills and trusts, powers of attorney, and other estate planning matters that can’t be included in the will. These legal documents are bound to state laws and regulations, and all assets owned by an individual become subject to the terms written in the plan.
It can take weeks or months to finalize an estate plan, but it’s worth going through the hoops because of the following benefits:
1. To Preserve Your Wealth
As people amass sizable wealth, they often become subject to legal disputes. If they lose a lawsuit, the courts might seize a substantial portion of their assets as payment to debts or compensation for the plaintiff. It’s a significant concern for people who wish to ensure their families, especially their children and grandchildren, can still benefit from the fruits of their hard work.
2. To Ensure Your Advanced Medical Treatment Wishes Are Followed
A living will is an estate planning document that details a person’s preferences regarding future medical care following a life-threatening treatment. It is reassurance that a person’s wishes regarding future treatment – or non-treatment – will be followed even if they can no longer communicate their consent.
This document states which medical care a patient wants and doesn’t want to receive, such as intubation, life support, and aggressive treatments. DNR or “do not resuscitate” clauses are also common inclusions in living wills.
3. To Arrange For Your Burial and Ensure It Happens the Way You Want
Estate planning covers funeral planning, which gives a person control over their funeral and burial arrangements. Pre-planning your funeral means deciding early on how and where you’d like to be buried, saving your family the stress of making crucial decisions while grieving. It can also prevent disagreements among your surviving family members, who might have different opinions on how your funeral services should go.
4. To Provide for Your Loved Ones
An estate plan is even more critical if you are your family’s breadwinner. You’ll want to ensure your family can still afford your mortgage and won’t be driven out of your home. Estate planning is also necessary for people in complex situations, like if you and your spouse are separated.
5. To Unburden Your Family of Burial Costs
Through estate planning, you can save on burial costs by specifying the services you want and discarding peripheral services offering little value. Funeral planning lets you cut down on costs, making it useful for wealth preservation planning. More importantly, you can apply for a pre-paid funeral insurance plan that will cover the costs of funeral services so your family won’t have to pay out of pocket.
6. To Ensure Your Wealth is Divided Among Your Beneficiaries As You Wish
One of the main components of estate planning is writing a will and designating your heirs and the inheritance you want them to receive upon your death. Having a will ensures your wishes will be followed regardless of any potential conflicts. You’ll have peace of mind knowing all your beneficiaries will receive their inheritance.
7. To Reduce Your Estate Taxes and Fees
The federal estate tax exemption in 2024 is $13.6 million for unmarried individuals and $27.2 million for married couples. This means you won’t have to pay estate tax if your estate is worth less than these ceilings. But if it is worth more, you need to pay a tax for the amount in excess of the exemption threshold.
Wealth preservation planning explores ways to minimize estate taxes, waive the estate tax, and keep your wealth within the exemption threshold so you and your family can enjoy more of your wealth. Examples are giving cash gifts to your beneficiaries, setting up irrevocable life insurance trust funds, and donating to charities.
8. To Protect Your Beneficiaries from Tax Liabilities
Naming someone as an heir can sometimes burden them. If your beneficiary lives in one of the states that have a state inheritance tax, they must first pay the levy to receive their inheritance.
Estate planning for wealth preservation can help protect your beneficiaries from tax duties. You’ll learn alternative ways to give money and properties to your heirs without subjecting them to taxes they need to pay out of pocket.
9. To Provide for Your Children’s Education and Other Needs
Those with young children or relatives can also include provisions for their education. The average cost of attending US colleges and universities is currently the highest in the world. Unsurprisingly, it takes decades for most middle-income American adults to pay off their student loans.
If this is a burden you don’t want your children to bear in the future, you can set aside part of your wealth to support their education. An estate planning attorney should be able to help you decide how to do this, whether by putting the money in a trust or investing in college educational plans.
10. To Ensure People You Trust Will Be Your Children’s Legal Guardians in the Event of Your Untimely Passing
Besides selecting an executor for your will, you can also designate legal guardians for your underage children. If you don’t appoint a guardian, the court will have to choose one, and it could be someone you don’t want near your kids. To ensure your children are protected and cared for when you’re no longer around, pick someone you trust as their guardian and name them in your will.
Protecting your wealth is necessary for ensuring the comfort and well-being of your family, dependents, and other beneficiaries after your death. It pays to dedicate time and resources to estate planning and wealth preservation. Most importantly, working with experienced estate and tax attorneys will help you achieve your goals.
Get started on estate planning with Wiles Law, a full-service Estate, Tax, and Business Planning law firm in South Carolina. Our attorneys have provided legal services, wealth planning, and preservation strategies since 2007. Let us help you protect your wealth and leave a meaningful legacy for your family. Contact us today.