Everyone knows you need to plan for your financial future. This means having some type of retirement savings. Most people also know that you should have a will. But, what not all people realize is that you should also consider setting up an estate.
You might be thinking, “Oh I don’t have a lot of assets or a bank account with millions of dollars, so I don’t need an estate.” But that thinking may be wrong.
Now admittedly, not everyone needs an estate. Sometimes a will is just fine. But, an estate can be a better way to plan for the distribution of assets than a will or living will. Here are some reasons why an estate may be a better option.
When someone passes away and there is a will, it goes to probate. Probate is the public hearing by a judge to determine if the will is the latest and most up-to-date document for distribution of assets. This is all fine and dandy until someone contests it.
In some families this can get dirty. As it is public information, anyone can look it up and contest the will. Putting your will into an estate avoids probate and allows for less contention of the will and final testament.
Setting Up Power of Attorney
Everyone should have a power of attorney, no matter what. By creating a power of attorney with your estate, the person you designate is able to follow your last wishes to every detail. It can also help smooth things over with family members. But you should still have a discussion about such matters when you are still alive.
Makes Passing Down Assets Easier
Setting up an estate can help avoid some of the estate tax and inheritance tax that many states have in place. This means more of the assets you own will be able to be passed down to others instead of being subject to as many taxes. As mentioned, an estate also makes information about who is getting what private and offers less cause for discord among family members.
This privacy can also be valuable if you want to donate assets to charity or other institutions. If you are passing down assets to minors, an estate will ensure that the money is managed correctly until they can manage it by themselves.
Estates are great for protecting the beneficiaries who get your assets. As stated above, an estate helps protects minors who may be receiving money. Sometimes this is set up in a trust. By creating an estate plan you designate who will be the trustee of the minor’s inheritance until they are old enough to manage it.
An estate can also help protect an adult from their own misfortune or possible mishandling from other family members. For example, if you wanted to give assets to your granddaughter, but not her husband, an estate can help you can set it up in the best interest of your granddaughter where her husband can’t access the assets.
Any plan of action for the future is a good start. A great plan is having an estate and making sure that minor children are taken care of should you pass unexpectedly, as well as ensuring that your last wishes are carried out. Having an estate plan makes things less questionable and can give your loved ones peace of mind, knowing they don’t have to worry about these things.
Do you have an estate plan? What are you plans for protecting and passing on assets?
Photo courtesy of: Ashish_Choudhary