No one wants to think about dying, much less plan for it. However, avoiding it can create a difficult situation for the family you leave behind.
Estate planning is about more than just how you want your assets distributed after death. It’s about protecting your loved ones and ensuring that your legacy is passed down for generations. Without an estate plan, the probate process can cause undue stress on surviving family members, leaving them with less control over their futures. An estate planning attorney can help you create a will or trust that ensures your wishes are followed and assets are protected after death or disability. All in all, estate planning is an important part of a healthy financial future. But when you’re just starting out, it can be hard to understand why it’s so vital. Here’s everything you need to know about why estate planning is important.
Estate planning is an opportunity to protect your family and loved ones. You can choose a guardian for minor children if both parents die, set up trusts, and appoint trustees to ensure your children are taken care of financially when you’re no longer here. A clear-cut estate plan can also avoid family conflict. Settling an estate can be contentious. Emotions are high from losing a loved one, and family members may disagree vehemently about how the estate is being handled. One thing leads to another, and your estate is now in litigation, threatening to rip your family apart. Though we often think it would never happen to us, estate litigation is real. You can devise a plan to avoid it by speaking with an estate planning attorney.
Probate is the process of transferring assets from an estate to beneficiaries. It can be expensive and time-consuming, especially if there are many assets or beneficiaries. In most cases, probate can be avoided by having an estate plan that clearly states who gets what and when. Suppose you own a home and have named your adult child as the sole heir in a trust. Upon your death, the house will pass directly to your child simply by virtue of the trust document. No lengthy legal battle, no one else trying to stake their claim, no court proceedings — all they have to do is show up at the appointed time for closing documents, pay off any outstanding liens and receive the title.
Another important reason to have an estate plan is to protect your financial assets from future estate taxes. If your estate is worth more than $12.06 million (or $24.12 million for couples), the federal government will impose an estate tax. Depending on where you live, there may be an additional state and income tax for the beneficiaries of your estate. With proper planning, you can reduce your taxable estate and Uncle Sam’s cut of your hard-earned assets.
Estate planning is about more than just money. It’s about preparing for the future and leaving your loved ones with a clear idea of your wishes. This includes if you become disabled or incapacitated. If this happens, someone will need to make healthcare or financial decisions on your behalf. With an estate plan, you can appoint a durable power of attorney to make these decisions on your behalf when you can’t. This can be a family member, a close friend, or even a lawyer. You can also create an advance healthcare directive that provides instruction on important topics like prolonging life, life-saving medical treatments, and other end-of-life care decisions. Doing so saves your loved ones the burden of doing it for you.
Estate planning is not just for the rich. Do you have life insurance policies, personal possessions, or financial or retirement accounts? Then you have an estate. Without a plan for that estate, the government makes a plan for you, deciding on your family’s future based on a law book. An estate planning attorney can help you avoid this by creating a plan that protects your family’s interests and assets — whether that’s a simple will or trust or a more comprehensive estate plan. The estate planning process is an ongoing activity rather than an event. It can be done in stages depending on your goals, objectives, and life circumstances. Our attorneys at Santa Barbara Estate Planning & Elder Law can help you create a plan that fits your needs and work with you to ensure it’s updated over time. Contact our office to book a free estate planning session today.