Estate Plan Protection is About More Than Just Assets
It is unfortunate that many people, especially business owners, do not think much about estate planning because they do not consider themselves wealthy enough to need it. Regardless of your current financial status and assets, everyone should be putting together an estate plan for several critically important reasonsi.
Protect Your Beneficiaries
You do not need to have a pile of assets to have an obligation to your family and beneficiaries to be sure that you pass along what you do have to those who should have it. From stocks and bonds to vacation homes or condos, if you do not take adequate precautions to set out who gets what, you cede control over those assets to others and the courts when you die. Just the process of probate can take months to years, tying up your assets, keeping them away from your heirs, and reducing their value through fees and legal costs. The bottom line is that dying without a will leaves the courts in charge of who gets what.
Protect Young Children
In conjunction with your will, you want guardianship documents that set out clearly who you want to become guardians of your young children. Choose a guardian carefully and discuss with them your wishes to be sure that they are in agreement. Designate a contingent guardian as well, just in case. You do not want the courts deciding who will care for your children.
Protect Heirs from Unnecessary Taxes
Start by considering that doing no planning in this regard can result in your heirs having your assets’ value reduced by as much as 30% or more in the form of different levels and types of taxation on estate assets. Using the will, designation of beneficiaries outside the will, and trusts, you can protect your heirs from a lot of taxation. Many assets, such as insurance policies and bank accounts, allow you to designate beneficiaries that take control on your death, keeping these assets out of probate and its costs.
Protect the Family from Disputes
It is common for the older people in a family to have more assets than their children and heirs. When they die, it can become a source of disputes among heirs as to who gets what. These disputes can tear apart otherwise strong families.
Another issue is if you become incapacitated without a durable power of attorney and a healthcare power of attorney, your heirs are left to deal with the courts and possibly fight among themselves over your care and assets. You know best who you want to receive your assets, who will do better with one thing and who will be best served with another.
The problem with procrastination or not appreciating the complexity of an estate resolution without the right preparation is that you cannot predict the future or wait until you feel you have enough to need an estate plan.