Estate planning is the process of passing on your belongings to your heirs after your demise in order to safeguard your assets along with your loved ones while avoiding any kind of complications. While most people think that estate planning is meant for the wealthy and older folks only, however, the fact is that it is meant for everyone irrespective of their age or wealth as everyone wants their family to be secured during your life and even after that.
In order to secure your estate, some basic documents of estate planning are required such as a last will, a healthcare proxy, a power of attorney and a living will. A will is required to specify the distribution of your assets according to your desire after you are deceased while designating an executor to ensure the proper proceedings. A health-care proxy is required to depute somebody to take care of your healthcare decisions on your part if you are ever incapacitated. On the other hand, a power of attorney is required to handle your financial affairs in case of your incapability to do so. A living will document is required to specify your wishes for the type of treatment you want to have, in case of dire medical situations.
Apart from passing on your property to your inheritor, estate planning also has several benefits like reduction of taxes, planning for unexpected, etc. Below listed are the top 10 benefits of estate planning:
10 Benefits of Estate Planning-
1. Provide for your loved ones: In the absence of an estate plan, your loved ones might suffer a lot as the distribution will be decided by the state court which might not be the way you wanted. Furthermore, the probate will be a long and costly process due to which they will get less and after a long time. Hence, an estate plan will help your family to avoid a financial crisis.
2. Protection of children: You never know what life brings for you so you have to think about every possibility. In case you and your spouse die altogether in an accident, then how your children will be raised. Also, in such a case, it is the possibility that the court might appoint someone as guardian for your children who might not have a good relationship with the children. To avoid such a situation, it is required to designate a guardian(s) for your children so that you are ensured that they are being taken care of by the person of your choice.
3. Lessen the family burden: When a person dies, it brings a lot of grievances to the family and makes it more difficult to plan the funeral simultaneously. While planning your estate, you can specify your wishes for funeral arrangements along with putting funds for it. It will lessen your family’s burden during that difficult situation.
4. Reduction in taxes: While creating an estate plan, you must ensure that you keep maximum possible money in your family’s hands by adopting various tax reduction strategies as most of the money of your estate loses following death goes to taxes
5. Retirement plans: As mentioned earlier that estate planning also benefits you during your life apart from the after death benefits. As the age grows, it brings lots of medical issues along with it, hence, healthcare is a must and has to be taken care of after retirement. You must strategize your retirement in such a way that it can reduce your healthcare costs and thus leave money for your loved ones.
6. Plan for incapacity: You never know what life brings for you in the next moment and you might get incapacitated due to an accident or severe illness which leads you to be incapable of managing your financial and medical decisions. In such cases, there must be someone who could play this part for you. A power of attorney designation for both financial and healthcare decisions can help you save time and money along with ensuring that everything is being managed as per your desire.
7. Support a favourite cause: If you are passionate about a charity or a local cause like education, religion, etc. then through a proper estate plan you can support them even after your demise.
8. Ensure smooth business continuity: In case you own a business, be it small or big, then you must have an estate plan for that. In case you fail to plan your estate, your business might fall apart after your death-causing significant financial problems for your family. Hence, you must ensure that there would be a successor who could continue your business as instructed by you in case you pass away or become incapacitated.
9. Provision for a family member with special needs: If you have a child or a family member with a disability then you must ensure that you involve them in your estate plan. You can set up a trust that will allow the child to remain eligible for government benefits while using the trust to provide funds to support them.
10. Avoid probate: If you get deceased without a will or trust, then the probate court is authorized to ensure your property distribution to your family which is a time and money consuming process. To refrain your family from probate, estate planning is a must, to ensure who will be the beneficiary and how the distribution will be done.
Also, if the estate is probated then your will and assets will come in public record. Hence, opting for a trust can ensure the privacy and protection of your family and assets.
Estate planning is something that is mandatory if you want to safeguard your assets and loved ones. A proper estate plan can let you be relaxed that you have your clear decisions documented for any kind of emergency be it your incapacity or death.