It is no question that the loss of a loved one is a stressful experience. But, this can be more taxing if legal issues surround the distribution of the loved one’s estate.
The typical family schedule is often packed with school, work, and general care for the kids – and where necessary, vacations and luxury buys are incorporated to spice up the family life. These activities are usually prioritized over establishing an estate plan – to decide who takes over your assets after you’re gone. In fact, only a minority of today’s population consider the strengths of having an estate plan – and actually do it!
But you do not necessarily have to leave a huge financial jackpot behind – no; you do not have to leave a pricey home or a valuable piece of art for your loved ones to get an estate plan in place. An estate plan allows for better control, security, and privacy of your legacy – and without it, there could be a lasting impact on your offspring and those you care about.
What is an Estate Plan?
Estate planning is the advance preparation – during a person’s life – for the disposition and management of that person’s asset base following his or her incapacity or death. This planning includes the distribution of assets to heirs, estate tax settlement, even planning what sort of care you prefer to receive if you are hospitalized due to a disability or incapacity.
In protecting your legacy and having absolute control over who manages your assets, here are five reasons estate planning is important.
Decide who inherits your Assets
What will you leave behind when you’re gone? Whether that be stock portfolios, your valuable possessions, family home, or real estate investments, there are a variety of things you own that could be considered as part of your estate plan.
In the absence of an estate plan, you will be leaving the court with the power to decide who inherits your legacy. And while this may seem like an easy process, it hardly is. Often times, family members have ended up duking it out in court for several years, and the process could still get ugly. With an estate plan in place, you get to decide who inherits what, saving your loved ones of any potential mess that could occur by leaving the process to chance.
Protects Your Family if there are young Children
It is only natural that no one thinks about death at a young age, but it is important that you prepare for the unthinkable especially if you have young children. This means you’d have to set up the will of your estate plan, which represents only a portion of the plan. The will allows you designate the number of children under 18 would be cared for, the guardians to provide this care (if both parents die before they turn 18), and the assets that they are to inherit. In the absence of a will, the courts will determine not only who inherits your assets, but who will provide care for your children.
Cover for your Medical care
In the event that you become incapacitated and cannot make critical healthcare decisions for yourself, you will need someone to make those important decisions on your behalf. Known as a medical directive, this process ensures a trusted family member or friend can act as an agent who can speak on your behalf, rather than relying completely on the decisions of a doctor. This agent will ensure life-sustaining measures are put in place should you suffer a terminal condition.
Eliminates a Family Mess
The fights and horror show that is the asset struggle among family members occurs more often than you think. One child or relative may think he or she is more deserving of an asset more than the other, and another family member may think he or she should take charge of the finances. Such disputes can get really ugly and end up in court, with your loved ones pitted against one another. You definitely need an estate plan to avoid this mess after you’re gone and designate who has control over your assets and finances. This will go a long way to quell any squabbles and ensure your assets are handled just the way you intend them to be.
Saves your heirs the risk of Overpaying Taxes
The goal of an estate plan is to protect your loved ones, which also means protecting them from tax burden as much as possible. Estate planning involves stating inheritance taxes on the overall estate. This will ensure you are able to transfer assets with the lowest possible tax burden to your heirs, making the process as easy and less costly as possible.
Simply put, an estate plan is very important if you want to protect your legacy and shield your loved ones from trouble. Without one, you will not be able to designate who owns what – not even who provides care for your young children.
If you are still confused about Estate Planning and have questions, please get hold of Roxane Kaye for a no-obligation consultation regarding your needs to see if we can help you. You can call her at or email her at [email protected].
About the Author: Roxane Kaye, has been practicing law since 2002. She is admitted to practice law in Michigan state courts and before the Federal Bankruptcy Court of Eastern Michigan, Southern Division, as well as the Federal District Court of the Eastern District of Michigan.