Why Estate Planning Matters for Everyone

You may be under the impression that estate planning is only for the wealthy. These important documents are important for everyone because it spells out what your final wishes are.

Estate planning:

• Allows you to choose who will inherit your assets
• Protects your financial and medical needs if you became unable to do so
• Minimizes disputes between family members over your assets
• Reduces inheritance taxes for your loved ones
• Helps avoid probate, which is a very lengthy and costly court process
• Protects minor children by assigning a guardian in the unfortunate event of an untimely death

Without an estate plan, the court will decide how to distribute all of your assets. This includes real estate, personal belongings, and finances. IWouldn't you like to have a say in who receives these assets? Without a plan, your loved ones could face the burden of making decisions for your health, dividing up your possessions, managing family arguments, major tax expenses, and court battles.

When we’re young, strong and vibrant, we don’t think about what would happen if we suddenly became incapable of making our own medical or financial decisions. Naming a person that you trust through a Durable Power of Attorney will help ensure that these decisions are made in your best interest. Having a healthcare proxy and living will can help make sure that you receive the care you need and desire.

Many people feel strongly about what lengths medical professionals will go to to keep them on this earth. Your opinions will only be heard when you've properly planned. Otherwise, your preferences are just best guesses made by surviving family members.

Communicating your intent for personal assets during estate planning goes beyond your dining room table or the closet full of clothes. Your assets include all of your personal belongings as well as your home, vehicles, savings and checking accounts, life insurance policies, stocks, bonds and mutual funds. Any liquid assets or investments are included in your estate plan. It may not be an easy decision to make now, but at least it will be yourdecision.

Grief and money can bring out the worst in even the best of people. Estate planning ensures that your assets go where you want. You decide who gets what, how, and when. Without a plan, your family will have to make these decisions, and that process can get ugly. Even worse, your estate could go to probate, where the court will make those decisions and take fees throughout the process. You can alleviate the emotional stress and tension between your loved ones as they cope with losing you with an estate plan.

About a dozen states enforce an estate tax, and some enforce an inheritance tax owed by the recipient of the assets. Maryland is one of the only states that currently enforces both an estate tax and an inheritance tax. A major reason for an individual to create an estate plan is to reduce the tax burden placed on their loved ones who will inherit the estate.

Certified, experienced estate attorneys in your state can help you divide your assets among multiple beneficiaries and set up strategic trusts to minimize taxes. Doing this leaves significantly more value behind for your beneficiaries. Keep in mind that federal estate taxes are only applicable to situations where the estate holds significant value (over $11 million).

Probate is the court-supervised process of validating (proving) your will, determining the value of your assets, paying off any remaining bills and taxes, then distributing whatever is left of your assets to who the court decides should get it. The probate process takes a considerable amount of time, it's costly and could cause a great deal of stress on your family. It also reduces the amount of inheritance your beneficiaries receive. Estates can be tied up in probate for a considerable amount of time.

In the event that both parents die unexpectedly before their children 18, there needs to be someone to provide for them. Without a will that names their guardians, the courts will step in to decide who will raise your children.

Creating an estate plan may not be a relaxing walk in the park, but the right professionals can make the process efficient and less stressful. Facing these decisions about your personal belongings and health is difficult, but it helps protect you and your family.

Don't face these difficult decisions and complex paperwork on your own. Reach out to a local, knowledgeable adviser who will help put your wishes into a legal document. You can make it much easier for your loved ones to handle things once you are gone.