Why Is Estate Planning So Important?

Why Is Estate Planning so ImportantEstate planning is a process involving the set up of a plan which establishes who eventually receives your assets. It is essential to wealth management and preservation, however, only a few people do it. This is primarily due to the misconception that estate planning is only for those with significant properties.

When one hears the word “estate,” images of mansions and yachts are immediately conjured. However, the truth is an estate refers to any property owned by a particular person. Therefore, estate planning is not reserved for only the wealthy. Anyone who owns an asset, whether a house or car, should take the necessary steps to protect their belongings and pass them on to the right family member when the time comes.

If you’re still asking, “why is estate planning so important,” then keep reading. This blog details its functions and recommends the best way to start the process. All of this information will help you prepare for what is to come.

Three Main Purposes of an Estate Plan

Your estate is the accumulation of your life’s hard work. So naturally, you want to protect it and ensure proper control in the event of your passing.

An estate plan exists to perform the following functions:

1. Protects Your Estate

Without proper planning, your estate might be subject to federal estate taxes. This means a large chunk of your assets goes to the government instead of your loved ones. Therefore, you should consider an estate plan to help minimize or eliminate estate taxes. With the help of an estate planning attorney, you can set up trusts and make irrevocable gifts.

2. Protects Your Family

Aside from protecting your estate, a plan may also preserve your family’s best interests. However, if you fail to make the necessary preparations, your assets must go through probate court.

Probate involves the court supervision of the administration of your estate. It is a long and arduous process that can take months, or even years, before coming to a conclusion. Probate can also give others the opportunity to fight over the estate.

The good news is you can avoid the court through proper estate planning. You can choose who will receive an inheritance and who will administer the estate without court intervention.

3. Protects You

Estate planning is not only functional upon your passing; it also comes in handy when you are temporarily or permanently incapacitated and can’t make crucial decisions. Two documents often included in estate plans are Durable Power of Attorney (DPOA) and Health Care Directives, also called a Health Care Power of Attorney or proxy.

A Durable Power of Attorney gives your lawyer the authority to act on your behalf, allowing them to handle financial decisions if you cannot. They can manage investments, pay your bills, and make legal and business decisions. On the other hand, a Health Care Proxy appoints a trusted individual to make medical decisions and permits them access to your medical records.

With the directives mentioned above, it can be easier to determine who among your loved ones is allowed to make legal decisions. However, if there is a lack of preparation or a financial institution rejects a DPOA, the court may need to step in and appoint an individual who may not be familiar with your wishes.

How To Get Started With Estate Planning

There is no specific way to create an estate plan since the contents and requirements depend on your concerns and your assets. Your estate planning attorney will work with you to create an ideal plan suitable for your needs and goals.

With the proper guidance, you can easily set up a plan that fulfills your objectives.

Secure Your Estate With the Seasoned Experts at Wiles Law

Wiles Law is a full-service estate, tax and trust planning law firm committed to helping families protect their estates through wealth preservation strategies.

Whether you need assistance with wills and trusts or want to develop solid asset protection opportunities, our experienced and knowledgeable lawyers are always happy to help.

To protect your estate, family and legacy and contact us today.