5 Reasons Why Estate Planning is Crucial
Many people seem to spend more time planning a vacation or even determining where to go out the following weekend than they do estate planning. It may not be as exciting to think about it as planning a vacation or reading restaurant reviews is, but you cannot choose who receives all you have worked so hard for without estate planning. Estate planning isn’t just for the wealthy. Even if you don’t have a pricey property or precious art to pass on, settling your affairs after you die could have a very costly impact on your loved ones if you don’t have a plan in place. We’ve selected the five most important reasons why estate planning is crucial, and you’ll find them further in this article. And for everything else, you can always consult Alabama’s experienced attorneys!
What is estate planning?
Estate planning is deciding who will inherit your possessions after you die. It entails making preparations to ensure that everything you own is distributed to the appropriate people. An estate may contain real estate, vehicles, bank accounts, investments, insurance, furniture, jewelry, and other valuables.
It is a comprehensive plan of action for your assets that may apply during and after your death. But don’t confuse estate planning with writing a will. Will specifies where your assets will be distributed after your death, who will be the guardian of your children, and other details.
Why is estate planning crucial? Here are 5 main reasons!
Let’s imagine you have a family of four, a couple of nice cars, a great house, and some money in savings and investments. Who inherits your possessions in the event of your death – your family or perhaps a relative? Or maybe it’s a cause close to your heart? This is where estate planning comes in – to make sure your wishes are carried out exactly how you wanted.
Regardless of financial situation or age, everyone can benefit from having an estate plan if they have things to leave and someone to leave them to. Here are the five main reasons why estate planning is crucial.
#1 Estate planning entails more than just writing a will
We already mentioned that estate planning and writing a will is not the same. Even though both contain instructions for handling your assets after your death, estate planning is much more comprehensive.
Besides your will, it may also include the following:
- Durable powers of attorney allow you to appoint others to make medical and/or financial decisions on your behalf if you cannot do so yourself.
- Medical directives specify the types of medical care you desire (or don’t) if you become incapacitated.
- Beneficiary designations determine who will get funds from life insurance policies, annuities, retirement accounts, and other financial accounts.
- One or more trusts help smooth property transfer to your heirs while potentially providing tax advantages to both you and your beneficiaries.
#2 Estate planning will save you time and money
When you die without a will, you are said to have died “intestate.” This means that the law of the state in which you live and possess property governs what happens to your assets and who receives them. The probate court will appoint a representative to distribute your assets.
No one can touch your assets or carry out your directions while all of this is happening. They are frozen until the court system examines every element of your estate and decides how to distribute your assets. While all of this is in progress, some of your valuables, such as fine art, might be kept in nycministorage.com, while your property will remain vacant for the time being. This process can take months or even years, especially in large cities or affluent regions.
This can be costly for surviving family members, given the legal fees. On the other hand, estate planning can considerably reduce the time and cost of dying intestate.
#3 Estate planning eliminates potential family drama
You’ve probably heard many stories about someone with money dying and causing a feud between family members about inheritance. Such fighting can get ugly and end up in court, putting family members against each other. Even if a dispute happens, your family can always count on Alabama’s best attorneys to help resolve it. But why not prevent it simply by planning?
Estate planning will allow you to pick who manages your finances and assets if you become mentally disabled or die. This will go a long way toward preventing family feuds. Plus, it will ensure that you manage your assets in the manner you intended.
Moreover, it will also assist you in making specific arrangements. For example, arranging for a child with health issues or establishing a trust for someone. It can also help you give more to the child who did most of the labor of caring for you in your older years. Estate planning is vital if you have children from different spouses.
#4 Your estate plan protects you
Estate planning isn’t simply helpful when you’re gone. It may also include a durable power of attorney and a healthcare proxy. These are two vital legal instruments that ensure your preferences are carried out if you are temporarily or permanently unable to handle them.
A durable power of attorney appoints your trusted relative or friend to manage your financial and legal affairs. On the other hand, a healthcare proxy gives someone the authority to make healthcare decisions on your behalf.
Without the “living will,” deciding who among your loved ones is legally entitled to act can get tricky. In the worst-case scenario, someone appointed by the court or a hospital employee unfamiliar with your wishes may make decisions for you.
#5 Protect your children by planning your estate
No one likes thinking about dying young. However, if you’re a parent, and especially if you have small kids, it’s vital to be prepared for the unthinkable.
For instance, if you die without a surviving spouse to take care of your children and you don’t have an estate plan in place, the probate court will appoint a legal guardian for them. In the worst case, the youngster may become a ward of the state and enter the foster care system.
So if you wish to have a vote in determining who will care for your child in the event of your death, you must name that person in your will. It’s also a good idea to name a backup guardian if your first pick isn’t available.
Final thoughts on estate planning and reasons why it’s crucial
There are many more reasons why estate planning is crucial, but we hope these five were enough to convince you to start planning your estate. Keep in mind that you’re doing it for your family, and you’re protecting them if something happens to you. If you need help with planning your estate, make sure to get in touch with experienced Alabama attorneys. They’ll help you make this often uncomfortable process as pleasant and as smooth as possible.