Estate 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, a majority of people do not plan for it. Sometimes people fail to plan because they have 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,” keep on 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 remain in 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 must have an estate plan to protect your estate from huge tax bites. With the help of an estate planning attorney, you can set up trusts, create joint accounts and make irrevocable gifts.
2. Protects Your Family
Aside from protecting your estate, a plan also preserves your family’s best interests. However, if you fail to make the necessary preparations, your assets must go through probate court.
Probate is the evaluation and transfer of administration of your estate. It is a long and arduous process that can take months or even years before coming to an agreeable conclusion. Probate can also cause rifts between family members who might fight over specific properties they want for themselves.
The good news is you can avoid all of this through estate planning. You can choose your heirs who will receive their inheritance without all the legal trouble.
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 and Health Care Proxy.
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, 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 what and how much you own. However, your estate planning attorney will work with you to create an ideal plan suitable for your needs and goals.
It is natural to ask why is estate planning important since not many people know it. With the proper guidance, you can easily set up a plan that fulfills your objectives no matter what they are.
Secure Your Estate With the Seasoned Experts at Wiles Law
Wiles Law is a full-service business, tax and estate planning law firm committed to helping families protect their estates through specialized wealth preservation strategies. Whether you need assistance with wills and trusts or want to develop a solid asset protection plan, our experienced and knowledgeable lawyers are always happy to help.
So protect your estate, family and legacy and contact us today.