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Estate planning is a chance to reflect on how you want your personal and financial belongings transferred after your death. Those belongings can be your car, house, stocks, business, insurance, and even debts. People have different reasons for preserving their assets. Distribution can be for the surviving family, such as a spouse and children, or other decendants. Some may even choose to donate their assets to charity.
Estate planning helps minimize confusion and conflicts among family members when it comes to dividing up an estate.
If you’re married, have children, have any assets like a car, property, house, or business, creating an estate plan will benefit you. You shouldn't put off estate planning until you are elderly just because the event of losing your life seems so far off. You never know what can happen, and you want to be prepared to leave your family in good hands for any situation.
Wealth doesn't determine whether you should create a plan. Any asset you own will be divided up after your death, so it's best to disperse your belongings how you see fit now to save time and stress for your loved ones later on.
Tax planning is an essential and required part of handling your estate. Reducing your tax commitments and liabilities while estate planning ensures that those who acquire your assets after your departure will only have to pay minimal taxes. As of 2021, U.S. estates worth $11.70 million or less are exempt from federal taxes. Ensuring your estate's value falls below this threshold will save the beneficiaries from estate and inheritance taxes.
Insurance policies are tax-free when a beneficiary receives the payout, but it may push the estate value over $11.7 million if included as part of your estate. Accurately estimate the estate's worth entirely to ensure you don't have to pay more in taxes if it's not necessary.
Your spouse doesn't automatically inherit everything upon your death. The automatic sharing of your assets is based on your particular state's laws of descent and distribution. This distribution of your assets might not necessarily be how you wanted it to be. An estate plan can guarantee the fulfillment of your distribution wishes.
Estate planning can result in many complications if not done right. A lawyer well-versed in federal and state laws can guide you to ensure that your estate plan meets all requirements, but they aren't a necessity for drafting these documents.
You can create most estate planning documents on your own with precise and reliable instructions. There are numerous online services to help you to set up an estate plan easily. Most of these use a questionnaire style to gather your information to create the plan.
Estate planning is all about preparing for the unpredictability of life. Omitting certain information about your assets or ignoring liabilities you have might result in conflicts in the future. It's critical to consider every possible scenario and prepare your estate plan accordingly. You should never hurry this process and take your time to ensure your estate plan accounts for any potential concerns.
Failing to update your estate plan can lead to severe complications in the future. There are chances that the trustee who inherits your assets passes on before you or loses your trust. If you name your spouse as your beneficiary, but you separate at a later stage in life, failure to update the document will result in your ex-spouse receiving all of your assets upon your death.
You might also obtain more assets over your lifetime and forget to add them into your estate plan. It's best practice to review the estate plan periodically when you undergo significant life changes.
There will be many misconceptions about estate planning. Knowing the steps ahead of time will undoubtedly simplify the whole estate planning process and allows you to focus on the essential parts.
An estate plan frees you up from worrying about your family's affairs after your passing and clarifies your intentions for your assets. If you'd like to set one up, head over to Complete Wills. We have all the tools you need to create a fully customized, state-specific, and legally binding estate plan. Every document at Complete Wills is attorney-created & approved.