Why is estate planning so important? It’s all about protecting your loved ones. Without estate planning, you can’t choose who gets everything that you worked so hard for.
Estate planning isn’t only for the rich. Without a plan in place, settling your affairs after you go could have a long-lasting—and costly—impact on your loved ones, even if you don’t have a pricey home, large IRA, or valuable art to pass on. Not convinced that an estate is necessary? Below is a few things you might consider.
Protecting Your Beneficiaries
No longer something that only high net worth individuals need but now many middle-class families need to plan for when something happens to a family’s breadwinner. Even if you’re only leaving behind a second home, if you will need to decide who receives the property when you pass away or you won’t have any control over what happens to it.
That’s because the main component of estate planning is designating heirs for your assets. Without an estate plan, the courts will often decide who gets your assets, a process that can take years and rack up fees. After all, a court doesn’t know which sibling has been responsible and which one shouldn’t have free access to cash. Nor will the courts automatically rule that the surviving spouse gets everything.
If you die without a will, which is a vital part of an estate plan, the courts will decide who gets your assets.
Protecting Your Young Children
If you are the parent of small children, you need to prepare for the unthinkable. This is where the will portion of an estate plan comes in.
To ensure that your children are cared for in a manner of which you approve, you’ll want to name their guardians in the event that both parents die before the kids turn 18. Without a will that names these guardians, the courts will step in to decide who will raise your children.1
Avoiding A Tax Bite
Estate planning is all about protecting your loved ones, which means in part giving them protection from the Internal Revenue Service. Essential to estate planning is transferring assets to heirs without creating a possible tax burden for them.
Even just a bit of estate planning can enable couples to reduce much or even all of their federal and state estate taxes and state inheritance taxes. There are also ways to decrease the income tax beneficiaries might have to pay. Without a plan, the amount that your heirs will owe could be quite a lot.
Eliminating Family Messes
Stopping fights before they start is yet another reason why an estate plan is necessary. This will enable you to choose who controls your finances and assets if you become mentally incapacitated or after you die and will go a long way toward quelling any family strife.
If necessary, it will also help you make individualized plans. Deciding whether to divide your estate exactly equally is one of the key tasks you need to think through. And, of course, if you’ve had more than one spouse—or have children from more than one family—an estate plan is urgent.
Does your estate plan include The Library Foundation? Would you like to? Contact Erin today to discuss how a gift to the Library could be included in your plan. Send us a message at Foundation @ tscpl.org