Five great reasons to make an estate plan today
People spend a lifetime building their personal assets. Naturally, most would like to have some control over the future of their hard-earned capital.
Unfortunately, that kind of control does not come automatically.
Establishing a will is the first step in determining the fate of belongings. The only one who can control a person’s estate and ensure it will go to the people they want – when they want – is the asset owner.
The best way to gain control of the future is with a sound estate plan. In fact, an estate plan which includes properly drawn trusts can ensure all intentions for family and estate are carried out. Just as importantly, it can save beneficiaries a substantial amount of money by eliminating unnecessary taxes and other costs.
A qualified professional can help create a sound estate plan that is tailored and customized to meet an individual’s needs. Following are some of the specific objectives that can be accomplished with a thorough estate plan:
Benefit loved ones or charities — Every estate plan is intended to benefit someone. Beneficiaries can be a spouse, children, a parent, another relative, a friend or a charity. It can even be a combination of these. With an estate plan, individuals may choose to provide for their beneficiaries through the creation of a trust or by making outright gifts, either while they are living or at time of death.
Ensure specific wishes are carried out — Individuals may have particular assets they wish to designate for certain people or preserve regardless of circumstances. Likewise, there may be specific ways a person wants the assets they have accumulated to be used after their death. Whatever special objectives may exist, an estate plan can help make certain they are accomplished.
Take care of minor children by nominating a guardian — When minor children are involved, it is important to nominate a guardian to care for them in the event of an unexpected death. By naming a guardian in a will, the probate court will be more inclined to honor the person’s wishes. If no guardian is designated, the court will select one without guidance. An estate plan can also set up trusts to care for children’s financial needs while they are minors (or beyond, if desired). This avoids the need to have a court-appointed and court-supervised guardian or conservator control the children’s future.
Achieve substantial tax savings — An estate plan can also help reduce tax bills. However, the advantage of saving taxes must be weighed against the possible disadvantages involved in distributing assets to accomplish those savings. A good plan should take into account its tax impact on the parties who will receive the assets.
Eliminate the costs, delays and public nature of probate — Generally, assets owned in one person’s name at death are subject to probate. Probate is a name for the legal process necessary to determine the validity of a will and to administer the assets of an estate. Legal costs are involved in probate, as well as delays in distributing assets.
Probate records are also available for public inspection, allowing anyone access to private asset and family information. Assets that are jointly held and assets held in a trust are usually exempt from probate. Owning joint assets, however, might increase federal estate tax and the risk that assets will be subject to the claims of creditors of the joint owner; interfere with property distribution; and restrict an individual’s freedom to deal with the property during his or hers lifetime.
To avoid probate while minimizing taxes, a person can place part or all of their assets in trust while they are still living, either under a “self declaration of trust” (where the person is the initial trustee and a professional third-party is the successor trustee) or under an agreement where the professional third-party acts as trustee.
Estate planning is something that many people avoid or procrastinate in addressing, but it’s a critical process for everyone with any assets to consider. This is truly an opportunity for individuals to take control of future planning for themselves as well as their beneficiaries. It can be a difficult undertaking, but employing a professional can turn a seemingly impossible task into an efficient and well-executed plan. They can share information, guide the process and ensure the client’s wishes are clearly stated and carried out when needed.