10 Things Estate Planning Can Do for You
The American Bar Association lists 10 advantages for an individual to create an estate plan. In this context, an estate plan refers to determining the legal disposition of property upon one’s death. For our client’s we also create Durable (aka “Financial”) Power of Attorneys and Advance Medical Directive. Below are the ten advantages provided by the American Bar Association regarding estate planning with my comments added below.
So, what are the advantages to estate planning? By taking the time and effort (and let’s be honest, also spending the money) necessary to plan your estate, you will be able to:
- Provide for your immediate family
Creating a plan for your estate is arguably the least selfish decision a person can make. This decision ensures a widowed spouse is provided enough money and children are assured their education and upbringing. If you have children under 18, both you and your spouse should have a will nominating personal guardians for the children, in case you both should die before they grow up. Otherwise, a court will decide without your input where your kids will live. Who would you prefer to make important decisions about their money, education, and way of life? A hand-selected individual or one who is court-appointed. The answer is clear.
- Get your property to beneficiaries quickly
Upon one’s death an estate is probated through the courts. This process is expedited tremendously if the property disposition is already delineated in a Will. Also, a Will reduces the chance that someone will legally challenge who is now the owner of property of the estate. Options include insurance paid directly to beneficiaries, joint tenancy, and living trusts, as well as using simplified or expedited probate and taking advantage of laws that provide partial payments to beneficiaries while a will is in probate.
- Plan for incapacity
During estate planning, you can also plan for possible mental or physical incapacity. Living wills and durable health-care powers of attorney enable you to decide in advance about life support and pick someone to make decisions for you about medical treatment. These documents are part of any competent estate plan and can save time and money down the line.
- Minimize expenses
Think the cost of creating an estate plan is too much? Just wait and see how much money goes into litigation should a dispute over property arise. The adage is if there is enough in the estate to cover the cost of gas to the courthouse, there will be an argument. Good estate planning can keep the cost of transferring property to beneficiaries as low as possible, leaving more money for your beneficiaries.
- Choose executors/trustees for your estate
Choosing competent executors/trustees and giving them the necessary authority will save money, reduce the burden on your survivors, and simplify administration of your estate. These are people who you know and trust, and it is better to hand-select these individuals than permit a court to do so instead.
- Ease the strain on your family
You can take a burden from your grieving survivors and plan your funeral arrangements when planning your estate. Or you may want to simply limit the expense of your burial or designate its place. There is no doubt your surviving family is going through a very difficult time. Planning ahead with an estate plan reduces this stress on loved ones.
- Help a favorite cause
Your estate plan can help support religious, educational, and other charitable causes, either during your lifetime or upon your death, and at the same time take advantage of tax laws designed to encourage private philanthropy.
- Reduce taxes on your estate
Every dollar your estate has to pay in estate or inheritance taxes is a dollar that your beneficiaries won’t get. A good estate plan can give the maximum allowed by law to your beneficiaries and the minimum to the government.
- Provide for people who need help and guidance
Do you have an elderly parent or disabled child, or a grandchild whose education you want to assure? You could establish a special trust fund for family members who need support that you won’t be there to provide.
- Make sure your business continues smoothly
If you have a small business, you can provide for an orderly succession and continuation of its affairs by spelling out what will happen to your interest in the business. However, it should be noted that a separate business succession plan may be necessary.