Most people are usually aware of the importance of creating an estate plan. Be it writing a Will or making a Trust. However, it’s not the most comfortable thought to entertain. Especially when everything is fine. The bad news is that the future is always uncertain. By the time you realize that it’s too late to create a plan… well, it’s too late.
However, if you think that estate planning isn’t for you then this article might get you to reconsider that thought.
“My family is aware of my wishes, I won’t need an Estate Plan.
“I’m too young to create one right now.”
I could go on and on with this and list but what’s more important is why you should create an estate plan regardless of your assets, net worth, age, or marital status.
Protect your loved ones
If you happen to, unfortunately, pass away without creating an estate plan, the state court will follow intestacy laws while deciding upon how to distribute your assets during the probate process.
The problem is that the court does not know what you would’ve wanted. Even if your family is aware of your wishes, the judge cannot take their word for it and would strictly adhere to the standardized intestacy law for your state.
On top of this entire probate process being time-consuming, mentally exhausting, and financially draining – the final decision of the court may not always be in you or your family’s favor.
Therefore, it’s important to specify exactly what you would want in an estate plan so that your loved ones never have to go through this situation in the future.
To plan for your own needs
You may be healthy as a horse today but what if that changes? We most definitely hope that never happens but it’s not wise to rule out the possibility of an unfortunate accident.
By creating an estate plan and including documents like a power of attorney and a living will you can plan for your own professional and personal needs when calamity strikes. This will allow you to appoint someone to make decisions about your finances, business, property, etc. in a situation where you’re no longer able to. It also protects you by letting you specify the kind of medical care you would want in case you become incapacitated and unable to communicate your wishes.
Secure the future of your kids
If you’re a parent, this is extremely important and at the same time extremely uncomfortable to even imagine. You’d never want to imagine a time when you’re not around for your children but in case that day comes, it’s a good idea to be prepared. You can appoint legal guardians in your estate plan who you trust to take good care of your kids when you’re gone.
Without an estate plan, the court will ask your family members to volunteer as guardians and take a decision based on who they think is the best fit.
The problem is that the judge does not know the details of your family dynamics. The decision made may affect the lives of your children in a negative way.
On the other hand, if nobody volunteers, the state would take custody and your children would enter the foster care system.
Reduce the risk of family feuds & legal battles
Someone dies and all hell breaks loose in the family. One sibling thinks they deserve more than the other or fights over who should be in charge of the finances. That’s just one example but I’m sure we know of many such horror stories. Brother against brother, sister against sister, and even relatives might join this battle possibly leading to spending many years running around courts.
An estate plan lets you reduce the risk of this happening by simply writing down a Will. You can even eliminate the possibility of such legal battles by creating a Trust which does not require probate or the involvement of the legal system and is effective from the moment you sign it. This way you can ensure the well-being of your family while making sure that your best wishes are kept in mind long after you’re gone.
Minimize what you’d owe in taxes
Ultimately, the tax which needs to be paid as a result of your loved ones inheriting your estate would be paid from your assets. There is no reason to be so generous and give your hard-earned money away in taxes. You should decide who gets to keep the fruits of your labor.
The IRS has set limits around how much money or assets you can transfer without being taxed. Typically, there are three types of taxes – gift tax, estate tax, and generation-skipping tax.
Without going into too much detail, creating an estate plan lets you plan the distribution of your assets in the most tax-effective way so that you’re able to minimize the amount the beneficiaries would owe to the government.
What does an Estate Plan look like
You could simply create a Will and move on, which is fine, but if you want a more comprehensive estate plan then it should include these documents:
- Last Will & Testament
- Durable Power of Attorney
- Healthcare Surrogate Designation
- HIPAA Authorization
- Living Will
Another important factor to consider is the probate process. Having this plan would make probate a streamlined process saving your family time and money.
While having these documents in place puts your loved ones in a safe spot, creating a Trust along with the above documents would be the cherry on the cake if you think that it’s best to keep matters in your own private control and get things done without involving the court. Having a Trust allows you to completely skip the probate process which further guarantees that your wishes are followed without any interference.
What if I have already appointed nominees?
Not all assets need to be mentioned in your estate plan. Let’s say you have a bank account where you’ve named your wife as the nominee. In this situation, adding her name to inherit the money in that account as a beneficiary in your Will is not required.
This holds true for any other assets that you own where you have already appointed nominees such as fixed deposits, your stock portfolio, etc.
These assets would automatically be transferred to the nominees without going through probate or the involvement of the legal system.
How to get started
Creating your Estate Plan yourself is simple, cost-effective, and saves you a lot of time that you can spend with your loved ones instead. A lawyer will charge you thousands of dollars for this but with TrulyWill you can get it done for less than one-third of that cost!
All documents will be legally binding, state-specific, and customized for your needs. You never have to worry about losing the papers because we’ll have them stored on the platform and you can come back to make changes at any time. Need 1:1 support from an Estate Planning Expert? We’ll help you with that too!
The best part is that you can do it from anywhere, at any time, according to your schedule and convenience. Have questions? Write to us at hello@trulywill.com
