What Is The Importance Of Estate Planning?
Before, people thought that estate planning was only for the rich. But today, anyone has the ability to plan their estate. Without estate planning, the freedom to decide regarding the distribution of your wealth can be compromised. Hence, if you want to take care of your assets and the people you want to benefit from them, estate planning is very important.
Here are the best reasons why estate planning is important.
Estate Planning Is A Way To Protect Your Beneficiaries
If you do not have an estate plan in place when you die, the probate court will be the one deciding who receives what with regard to your estate. Their decision can turn into something that you don’t actually intend. The court usually decides in favor of the spouse, and your children can receive little to no portion of your estate.
Estate planning allows you to decide for each of your properties. Doing this ensures that everybody receives an equitable share of your wealth.
Estate Planning Ensures Protection For Young Children
In estate planning, you can designate the rightful guardian of your children who are under 18 years of age. The guardian will be responsible to raise the children until they reach the age of maturity, which is normally 18-21 years of age.
Estate Planning Reduces The Amount Of Estate Taxes
One important facet of estate planning is the transfer of assets while reducing as many taxes as possible. Normally, tax payments are deducted from the total estate. Hence, significantly reducing the estate tax means allowing your beneficiaries to receive more.
Estate Planning Helps Avoid Family Wars
You’ve heard this story before—a family member dies and the rest of the members fight for the biggest sum of assets they can receive. Estate planning allows you to decide properly the portion each of your beneficiaries will receive according to your liking.
Estate planning also allows you to choose someone to make decisions financially and medically in case you become incapacitated to decide for yourself. This avoids conflicts inside the family as well, as you have already laid your instructions clearly.
Having an estate plan will also allow you to create arrangements per individual. You can individually set up a health fund for someone in your family who needs to undergo medical procedures.
What Are The Different Types Of Estate Planning?
There are at least three kinds of estate planning, namely, Intestate Planning, Last Will and Testament, and Trust Planning. Here is a thorough discussion on each type to better help you understand estate planning better.
Intestate estate planning refers to the default estate plan set by the court. In this case, you are not able to create a will or trust. Hence, the court shall decide about the partition and distribution of your assets. This process involves a lot of complications and would normally make decisions that you would not prefer.
Last Will & Testament
A will is a document that expresses all your wishes on how your assets shall be distributed and managed at the time of your passing. Creating a will allows you to save money from probate court proceedings that can reduce your estate.
Trust planning means gathering all your assets and assigning a trustee to manage them until the time of their distribution. This involves creating a contract between the grantor and the trustee and can be modified or canceled as long as the grantor lives. Putting your assets in a trust also allows you to avoid probate court fees and save you money from your estate.
Who Are The Parties Involved In Estate Planning?
There are normally three parties involved in estate planning. These include the grantor, trustee, and beneficiary. Here is a detailed explanation of each party involved and their roles in the process.
The grantor owns the assets to be distributed at the time of their death. They will be the ones to select the trustee and beneficiaries of the estate planning. The grantor also creates the will and other pertinent documents which involve the decisions to be made at the time of their passing.
The trustee is the person assigned by the grantor to manage the assets until the end of the grantor’s lifetime. The trustee receives fees for their services through the trust funds. The trustee can also partake in income-generating projects using the assets of the grantor and benefit from those.
The beneficiaries of the estate planning are those whose assets of the grantor will be distributed to. This includes family members, spouse, children, friends, or anyone the grantor wishes to include. The beneficiaries can either be a single person or a group of individuals.
Other Frequently Asked Questions About Estate Planning
Here are the answers to some of the most frequently asked questions regarding estate planning.
What Is Probate?
Probate is a proceeding supervised by a court that aims to determine all of the grantor’s assets after their passing. This also includes identifying their creditors and beneficiaries. Probate can last up to 12 months with fees that can cost thousands of dollars.
Is There A Difference Between A Will & A Revocable Trust?
A revocable trust is actually an alternative to a last will and testament. It allows the distribution of your assets to be made in the same way as how a will executes it. Using a revocable trust has an added possibility of avoiding huge probate fees from the proceedings.
This is advantageous especially to those who own several real estates in multiple states. If the trust manages all of your properties, then the need for probate is reduced or even removed in states where you have assets.
However, keep in mind that establishing a trust needs more effort and time to finish. You also need to transfer the ownership and management of your assets even if you’re still alive. Hence, as you grow your assets, you must be wary of titling them under the name of the trust.
Can You Include A Plan For Your Pets?
You might have wondered if you can actually leave a piece of your wealth to ensure the welfare of your beloved pets. Well, fortunately, the answer is yes. But, instead of entitling them to money— you must leave the money to a designated person who will take care of the pets for their pet care and other needs.
There is also an option to create a trust for your pets. However, this process is normally costly and will involve a lot of complicated regulations. If you have not included your pets in your will or you left without any words about them, there are rescue groups that can give foster care for them. However, this can involve a lot of risks, especially if the group is outside of your area.
Can You Donate Some Of Your Wealth To A Charity?
Definitely, you can leave a portion of your wealth to your chosen charity at the time of your passing. Doing so has some impacts on the taxing procedures of your estate. Donating to charity gives you a tax credit of up to 50% and may lead to various exemptions with regard to estate taxes.
Normally, this will result in a reduced inheritance tax that your beneficiaries must pay upon the distribution of your wealth. The grantor shall choose a charity that maintains a charitable status that is recognized by the government.
However, keep in mind that a family member can raise an objection to the courts if they feel that the grantor has left more money in a charity compared to them. Here, the court will consider evidence from the family and decide on the issue accordingly.
Should You Hire A Lawyer To Write Your Own Will?
The answer may depend on the complexity of your assets. If you have only a small portion of assets to distribute, writing your own will can be a practical and better option. However, if you have complex, huge amounts of assets, then hiring a lawyer to help you carefully craft your will is the best option. At the end of the day, lawyers are there to help you take care of your wealth and family when the time comes that you cannot do so.
How Can Weiner Law Help You To Fully Understand Estate Planning?
Weiner Law is a firm that focuses on estate planning. They ensure that you can understand the whole process before, during, and after estate planning. To educate their clients, Weiner Law conducts educational presentations, which include webinars and events that explain estate planning better. These educational presentations also cover the recent changes and updates in the laws applicable to estate planning.
Moreover, Weiner Law has a knowledge library that includes sets of resources that can help clients understand estate planning more comprehensively. These include journals and newsletters that discuss relevant and timely information about estate planning.
Ultimately, Weiner Law cares for you and your loved ones. The firm aims to strive for a more personal approach to their clients, rather than transactional. They deep dive into your family dynamics in order to protect the legacy of your family.
If you believe that Weiner Law can help you in your estate planning journey, book an evaluation with the firm here.