Courtney Anderson EA Tax
Courtney Anderson EA Tax
Financially Conscious. Health Conscious. Earth Conscious.

WHAT IS ESTATE PLANNING AND WHY IT IS IMPORTANT?

Courtney
06.23.21 05:51 PM Comment(s)

WHAT IS ESTATE PLANNING AND WHY IT IS IMPORTANT?

Many people believe that estate planning is only for the rich and wealthier people, but that’s not true at all. It is essential to everyone in some ways.

Estate planning simply means deciding and protecting who will inherit your assets after your death. The majority of people solely consider growing their earnings and possessions throughout their lives. They rarely think about what will happen to their assets and it cost them a lot in the long run.

WHAT IS ESTATE PLANNING?

Estate planning is making an important arrangement so that everything you possess, or "estate," will go to the deserving people after you die. Estate planning includes Land, bank accounts, vehicle, investments, and insurance, as well as furniture, jewelry, and other valuables.

An estate plan allows you to direct how those items are distributed to individuals you care about. It organizes your affairs and records your objectives in writing. It specifies how you want your personal property, possessions, cash, and financial assets distributed among the people you care about.

If you don't make these decisions while you're still alive and able, state law and probate courts may do it for you after you've passed away.  But the outcomes may not represent your preferences or meet the demands of your family.

Here we’ll go over some of the major reasons why estate planning is important and how it benefits you and your family.

·  ESTATE PLANNING GOES BEYOND A WILL

People often believe that a will and estate planning is the same thing but that's not the reality.  They both specify how your property and assets should be handled after your death, but estate planning goes much farther. It may also contain durable powers of attorney to choose people to make financial or medical decisions on your behalf you’re unable to give instructions yourself.

Medical directives specify the kind of medical treatment you desire (or don't want) if you become unable to communicate. And beneficiary designations are used to specify who should get money from life insurance policies, annuities, retirement accounts, and other investments.

 

·  ESTATE PLANNING SAVES TIME AND MONEY

When you pass away without a will, you are said to have died "intestate," which means that the laws of the state where you reside and hold property govern what happens to your assets and who receives them. Your assets will be distributed by a representative appointed by the probate court. In many situations, the position is given to the surviving spouse. If you don't have a surviving spouse and no other close relatives are ready or able to take over, the court will appoint a public trustee to distribute your assets according to state law.

 

While all these things are happening no one would be able to touch your assets or carry out your directives. They're blocked until the court system has gone through every aspect of your estate, applied state laws, paid off your obligations, and decided how to distribute your assets.

 

The estate pays the lawyers' costs during the probate procedure, which includes paperwork and court hearings. It might take months, if not years, to complete, especially in large cities or rich regions. It may be extremely expensive for remaining family members due to legal fees.

 

You can reduce the time and expense of dying intestate by estate planning by creating a will that names an executor of your estate and making sure all your investment accounts, and other bank and brokerage accounts have correct living beneficiaries.

 

·  ESTATE PLANNING PROTECTS CHILDREN

Who will have custody of your children and other dependents if you die without a surviving spouse to care for them?

 

If they don't have an estate plan, the probate court will appoint a legal guardian/conservator for them, which is usually a family member like a grandmother. Alternatively, a third party, such as a family friend, might petition the court for guardianship. If a minor kid has no living relatives and no third party steps forward, the child may be declared a ward of the state and placed in foster care.

 

If you want a say in who will look after your child after you die, you must name that person in your will. It's also a good idea to name a backup guardian in case your primary pick is unavailable.

 

Estate planning isn't only for the wealthy, and it doesn't have to be a time-consuming or costly procedure. An estate planning lawyer, also known as a trusts and estates lawyer, can help you develop an estate plan that is tailored to your requirements, financial concerns, and family situations.