Why is Estate Planning Important?
Updated: May 15
You work hard to take care of your family, and you have worked hard for your property & savings. How will your family be cared for after your death or disability? Estate planning sounds so formal, but, at its core, it is simply taking care of yourself and your family. It is never too early to think about your estate plan. Your estate plan will give your loved ones guidance on how to handle your affairs after your death and provide and care for them as well as you in the event of an accident or illness that leaves you disabled. A good estate plan will make things easier and less stressful for your relatives and will make sure that your possessions get passed down to them. Regardless of how many assets you have, you and your beneficiaries will benefit greatly from an estate plan.
Components of an Estate Plan
There are some important components of a good estate plan. You may need some or all of these to create an estate plan that works best for you. An estate planning attorney will help guide you through the process to ensure that your estate plan covers all the essentials necessary. An estate plan may include a will, a trust, a health care directive, power of attorney, guardian nomination and more. An estate plan is not one-size-fits-all. You and your estate planning attorney will customize your estate plan to meet your specific needs.
Estate Planning is More Than a Will
A will is a document that provides legal authority for the distribution of your assets and property after your death. A revocable living trust is like a will but it is also effective if you become disabled. A will and a trust are an important part of an estate plan, but they are not the only part. An estate plan takes planning a step further by incorporating many additional considerations. For instance, your estate plan may provide provisions to appoint a power of attorney to make medical or financial decisions on your behalf if you become incapacitated. An estate plan also incorporates care for dependent children.
You can include health directives to detail the type of medical care you wish to receive if you are unable to communicate. An estate plan can establish trusts that will pass your property and assets to your beneficiaries in a way that is more favorable for taxes. An estate plan allows you to detail exactly how to distribute insurance benefits, retirement accounts, annuities, and other accounts. It is particularly important when you have complicated finances and you want to ensure that your assets go to those you want after your death. If you die without a will or trust, your estate will be distributed according to the intestate laws, and your assets could go to someone other than your loved ones.
An Estate Plan Makes Things Less Stressful for Your Loved Ones
The death of a loved one can be difficult and stressful. A comprehensive estate plan will ease the minds of your loved ones because they will know your exact wishes upon your death. Your loved ones have enough to deal with and do not need the added anxiety of handling your affairs without a will or estate plan. Your estate plan gives your family members a guide for taking care of the many issues that will arise and giving them the answers they need without having to worry that they made the wrong choices.
An Estate Plan Addresses Taxes
There are often hefty taxes associated with inheritances and estates. Washington has an estate tax requirement in place. There are some things you can do to protect your loved ones from excessive taxes when they receive your assets. An estate plan will address the way you pass down your assets to your beneficiaries, making it easier to handle state and federal tax obligations. Without proper planning, your loved ones may face higher taxes on their inheritance and they could lose out on hundreds or thousands of dollars that would otherwise go to them or a charity of your choosing. A good estate plan addresses tax matters through the implementation of valuable tools, such as trusts. A trust could provide an alternative distribution that could minimize or defer tax obligations.
Your Estate Plan Will Protect Your Children
When you have children, you need to make sure you have a plan in place to care for them in the event of your untimely death. The last thing you want is for your children to have to grow up without a loving relative or trusted friend to care for them. The best thing to do is provide for a custodian or guardian nomination for your children. You can appoint a relative or friend to care for your child. Without such designation, the court will make the determination of a guardian. In some cases, the children could become wards of the state and end up in foster care.
An Estate Plan Can Improve the Probate Process
When a person dies without having a will or trust in place, they have died intestate. This means that state laws will apply to the distribution of assets and property. The probate process can be more difficult and may take longer when you do not have an estate plan. In that case, the assets of the deceased may be frozen until the court reviews the estate. By extending the length of time to complete the probate process, your loved ones could be in a state of limbo until everything gets resolved. It can also cause an increase in legal fees.
Estate Planning Gives You Peace of Mind
Estate planning is a comprehensive compilation of planning and executing documents that provide guidance after your death. An estate plan addresses a number of issues, including a last will and testament, trusts, assignment of a healthcare power of attorney, assignment of durable power of attorney, distribution of assets, beneficiaries, and guardianship, among other things. When you have an estate plan in place, you know that these major matters are covered, and your loved ones will be protected and secure when you should pass away. You can adjust or modify your estate plan if your needs change before your death.
Estate planning preserves your wealth and valuables for your family and provides for their future. An estate plan ensures that you will continue to care for your loved ones, even after your death. Do not wait to implement an estate plan. The best time to implement an estate plan is before you need one. To learn more about estate planning, contact us today at View Ridge Family Law & Estate Planning at (206) 502-4748.