Many people spend more time planning vacations, buying a car, and choosing where to eat dinner than estate planning, deciding who will inherit their assets. Although it may not be as enjoyable as planning a vacation or reading reviews about restaurants, estate planning is essential to protect your assets.
Estate planning is not just for the wealthy. Even if you don’t have a large IRA or a valuable home to leave behind, a plan can help you settle your affairs after your death. Are you still skeptical about the importance of an estate plan? These are the top four reasons to have an estate plan.
An Estate Plan Protects Beneficiaries
Estate planning used to be something only the wealthy needed. Many middle-class families must plan for what happens to their breadwinners or breadwinners. You don’t need to be super-rich to make it in the stock and real estate markets. These assets will produce assets you want to pass on to your heirs.
Even if the second home is yours, you can’t control who gets it after you die.
An Estate Plan Protects Young Children
Although no one wants to die young, it is something that everyone should consider.
Name your guardians to ensure that your children are taken care of in a way you approve. That is especially important if both parents pass away before their 18th birthday. The courts will decide who will care for your children if there is no will.
An Estate Plan Spares Heir a Big Tax Bite
Estate planning is about protecting your loved ones. It includes giving them protection from IRS. Estate planning involves transferring assets to heirs to minimize the tax burden.
Couples can reduce their federal and state estate taxes and state inheritance taxes by doing some estate planning. There are ways to reduce the amount of income tax beneficiaries may have to pay. The amount your heirs could owe Uncle Sam without a plan can be very high.
An Estate Plan Eliminates Family Messes
We have all heard horror stories. The war begins when someone with money loses their family. One sibling might think they are better than the other, while another sibling may believe they should have financial responsibility even though they are notorious for piling up debt. It can lead to family members being pitted against each other and even in court.
Another reason to create an estate plan is to prevent family feuds from arising since it will assist you in doing so. You will be able to decide who will manage your finances and assets after your death or if you are mentally incapacitated. It will help you avoid family conflict and ensure that your assets are contained in the best possible way.
The Bottom Line
Estate planning is necessary if you want to protect your assets and loved ones if you are unable to do so. You could be subject to substantial tax penalties, and your heirs could have to pay the court a lot of money for their inheritance. The courts may also decide how your assets will be divided, including who gets to care for your children.