If you understand estate planning, then you should also be aware of the different benefits one enjoys by virtue of the same. Whether its tax reasons or security for loved ones, estate planning is something we all should consider and this article will detail the exact reasons why!
PROBATE
The most common reason to opt for estate planning is to avoid probate. Probate is where a person’s estate is administered generally upon their death, without giving regard to personal wishes or preferences.
PROTECTING YOUR LOVED ONES
The second biggest reason for having an estate plan is to protect your loved ones from any unfortunate circumstances. For minors, access to funds and assets is restricted until they reach the age of maturity and court-appointed guardians can potentially scam the minor out of their inheritance. Similarly, adult beneficiaries can also fall victim to outside influences, creditors, or even to themselves due to bad decision making. Estate planning will ensure that all such beneficiaries are protected at all times.
You can save your loved ones from a lot of grief if you have a proper estate plan in place and ensure that they have a future. Losing inheritances can have a profound psychological impact on a person and it is best to take any measure possible to avoid such an unfortunate outcome.
TAXES
Without an estate plan, if you were to die then your heirs would be subject to significant taxes in the form of inheritance taxes and other applicable state and federal taxes. With estate planning, you can significantly reduce, or even completely eliminate, these taxes. Trusts are one mechanism that could help with this.
AVOIDING UNFORTUNATE EVENTS
Having an estate plan in effect can help in avoiding numerous family disputes which tend to pop up after someone passes away. Siblings can end up at each other’s throats if they feel wronged because of the inequitable distribution of assets without an estate plan in effect. In order to avoid any such disputes, it would be best to have an estate plan in place after consulting with an expert on the best way to distribute your assets once you pass away.
ASSET PROTECTION
While not as ethical as the other reasons on this list, estate planning can also help protect your assets if you were to fall victim to creditors or some other lawsuit that carries a hefty claim. By estate planning your assets would be assigned to different beneficiaries and, under the eyes of the law, such assets would not strictly be considered as yours.
As such, any lawsuits or claims would not extend to these assets and you would be able to maintain your holdings without being affected in any significant way. Many see this as an underhanded tactic and it’s usually people who deserve the trouble they’re in that opt for estate planning for this reason.Regardless of what your reasons may be for opting for estate planning, a certain degree of skill and knowledge is required in having an effective plan in place. Therefore, it’s necessary that you consult with an expert before making any decisions and signing any legally binding document. If you’re looking for professional advice, consider opting for NGLIC Estate Planning services.