Most everyone considers themselves very busy with their day-to-day lives. Whether it is work or family or something else, chances are you have something (or some things) in your life that keep you daily schedules filled up. In the crush of addressing daily responsibilities, it can be easy to lose sight of things that may not seem like immediate priorities. Estate planning can be one of those things, making it easy to put off. Don't fall into this procrastination trap. Failing to take the steps necessary to get an estate plan in place is a serious risk and this gamble can proven extremely costly to you and your loved ones.
If you don't have a valid will and/or living trust, both your loved ones and the legal system may not know how you'd want your assets divided after your death. When this happens, the courts will classify your estate as “intestate” and will distribute your wealth according to certain laws passed by your state's legislature. Leaving your plan up to the laws of your state, instead of taking control of it yourself, can risk leaving nothing to cherished loved ones and also possibly leaving significant portions of your wealth to people that you did not want to receive it.
Should you want to avail yourself to the potentially time, money and stress-saving benefits of avoiding probate, you need to create a plan. There are many options available for avoiding probate, including living trusts, transfer-on-death deeds, pay-on-death accounts and other tools. Without a plan, your wealth must, as mentioned above, be distributed using the rules of intestate estates, which means going through the probate court process.
If you want to make sure that you are best positioned to avoid (or at least minimize) death taxes, you need to have an estate plan. While the current exemptions values under federal estate tax laws are very high, the numbers when it comes to death taxes under the laws of certain states are less forgiving. Regardless of the state in which you reside, incurring both state and federal death tax obligations can be easier than you think, especially if you are a small business owner or a farmer. Your estate plan allows you utilize all the tools available, including gifting strategies, trusts and insurance products, to put your family in the best position possible.
Additionally, if you have minor children or children with special needs at home, you have extra incentive to plan. With a properly drafted and executed will, you can name the person or people you want to serve as the guardian(s) of your child. If your child has special needs, your plan can include special trust planning elements that will allow you to leave part or all of your wealth to your child with special needs without risking your child's eligibility to continue receiving essential government benefits.
Your planning process can make sure that you have a genuinely complete plan in place. This can include powers of attorney and trust planning that may protect you in the event of incapacity, as well as advance directives to protect your desires in terms of end-of-life planning.
In addition, this process can be your opportunity to address other planning issues that you may not have even thought about. For instance, do you have a plan to cover your final expenses and the other costs of carrying out your estate planning wishes? If not, you may want to consider the options available to you in terms of life insurance and other insurance products, which can offer important assistance in achieving this goal.