Estate planning can be thought of as the process of anticipating and arranging, during an individual’s life, for the management and disposal of his or her estate during the person’s life and after death, while minimizing gift, estate, and income tax. However, 55% of Americans don’t have even a simple will.
It’s really important to have a will, even if your total assets are minimal. While you can find a will online, you’re much safer visiting with a qualified and experienced estate planning attorney to develop a customized plan that works for you. An estate planning attorney has the in-depth knowledge and skills to make suggestions that will help determine your future asset allocations.
When considering a legacy and to whom and what to leave behind, there are three reasons why people do estate planning: probate fees and tax reduction, asset protection and control and management.
Probate Fee and Tax Reduction. When a person has more than a certain level of assets, they may have to pay state and federal estate taxes, depending upon the value of the accounts and based on where they live (some states have estate taxes, while others don’t). An experienced estate planning attorney can help explain the laws and help you to make wise decisions as to whom, where, and when to designate your assets. Working with a legal professional who’s well-versed in estate planning, will help you to reduce probate fees and inheritance taxes.
Asset Protection. It’s critical to protect your assets, like safeguarding your assets from spend-down (the process of reducing assets to qualify for Medicaid) in a nursing home situation. That’s a great reason to be proactive and develop an estate plan.
Control and Management. This is a big reason why many families engage in estate planning. Properly done, it eliminates worries and ensures that your final wishes regarding asset distribution are carried out.
Estate planning also avoids any guessing and provides a detailed plan of who, what, where and when for your heirs during a trying time.
Reference: Wealth Advisor (May 29, 2018) “The 3 Reasons Why People Do Estate Planning”