Planning for the future is prudent and responsible. If you want to adequately prepare for any unforeseen event, you should start estate planning now.
Some may think that estate planning is not something they need to worry about yet. We assume we will have plenty of time to do that in the future. While that could be true, that does not do anything to diminish the benefits of early estate planning.
Let’s use this article to highlight the different reasons you should start setting plans for your estate as early as today. Stay tuned so you can better understand how you should handle that important matter.
The Benefits of Estate Planning
Estate planning features numerous elements. It includes laying out a will or creating a trust if that is what you prefer. The division of assets is also another key aspect of estate planning.
Choosing who gets power of attorney and naming an executor of your estate are additional aspects of that important task. If you plan on donating to charities after you pass away, that should be settled during estate planning as well.
Those are some of the major elements of planning your estate. You stand to benefit greatly from getting those matters sorted out early. Find out why early estate planning is so helpful by checking out the rest of this article.
Estate Planning Allows You to Fully Control the Distribution of Your Assets
After your passing, your heirs can claim assets from your estate. Whenever discussing valuable assets such as money or properties, things tend to get messy. Everyone will stake a claim to your estate, and a long, drawn-out battle may ensue over who gets what.
The last thing you probably want is to see your kids fighting over the assets included in your estate. Fights like that can tear families apart. Even if you settle the matter eventually, it can do irreparable damage to the ties that bind your family.
As the owner of the estate, you can prevent those acrimonious arguments from taking place.
Together with your lawyer, you can start drafting plans for your estate’s assets. Take the time to consider the value of each asset and decide which of your beneficiaries could use it the most. You can also plan out the distribution of your assets to ensure that each of your beneficiaries will receive an equal share.
You can also use your will to state why you are distributing your assets that way. Doing so will give your heirs valuable insight into your decision-making process. That insight may help prevent fights from taking place.
Estate Planning Can Minimize the Tax Obligations of Your Beneficiaries
The entirety of the estate you leave behind following your passing does not go to your heirs. It may still be subjected to deductions, depending on how you set it up.
For instance, estate taxes will likely come into play before you can distribute your assets among your heirs.
In New York State, you will see that the basic exclusion amount for estate taxes increases annually to account for inflation. If the value of the assets you are leaving behind exceeds the basic exclusion amount for the date of your passing, then it will be subjected to taxation. The exact amount your estate owes will vary based on its value.
Professionals will tax an estate that exceeds the basic exclusion amount as a whole. That means they will take a big chunk of change out of your estate.
Avoiding taxes is not possible if you intend to leave a sizable estate behind for your heirs. However, you can take some steps to mitigate the impact of taxation.
Coordinate with your lawyer to set up a trust that you can use to soften the blow of estate taxes. Creating certain accounts may also prove useful as you try to ensure that your heirs receive as much of the estate as they can.
Taxes will not completely drain your estate’s assets. Even so, mitigating their impact as much as possible is worth doing if you want your heirs to fully benefit from your estate.
Estate Planning Safeguards the Financial Interests of Your Children
Do you have young children? If you do, then engaging in estate planning early on is even more important for you.
We know that the thought of leaving your young children behind probably breaks your heart, but it is a possibility you have to acknowledge. After all, your kids could end up in a vulnerable spot if you do not set plans for their financial future.
In many cases, the court will appoint a guardian or conservator for your children if you and your spouse pass away without leaving behind a concrete guardianship plan.
The issue there is you do not know who the court will appoint as the guardian or conservator of your child. There is a chance that the court will select a relative you are not on good terms with. If that happens, there is no telling what could happen to your child.
The court-appointed guardian or conservator could take advantage of your child and siphon money away from them. The money that is supposed to set your kid up for life could end up in the hands of someone with bad intentions.
You probably do not want to leave your child’s fate in the hands of the court or a relative you did not pick. Make sure you detail guardianship plans for your young child while planning your estate so they will have proper care no matter what happens to you.
Estate Planning Prevents Irresponsible Spending
An old saying states that “experience is the best teacher.” Kids do not have a lot of experience. Many of them are still naïve to the ways of the world and that makes them more susceptible to making mistakes.
While you are still around, you can rein your kid in and use their mistakes as teaching moments. Unfortunately, you cannot always be there for your child.
If you pass away unexpectedly, you may leave behind a sizable fortune that your child does not know how to handle. Your child ending up in that situation could turn out badly as they are more likely to make costly mistakes.
Estate planning gives you a way to protect your child from those mistakes even if you are no longer around.
Open a trust and use that to hold the assets in your estate. Make it clear using the trust that your child will only gain control of their inheritance after they reach a certain age. In the meantime, you can appoint a trustee to manage your child’s financial assets.
By taking those precautionary measures, you can guarantee that your child will only gain possession of their inheritance when they can use it wisely. They will not engage in wasteful spending brought about by youthful impulses.
Estate Planning Speeds Up the Transfer of Your Assets to Your Beneficiaries
A common misconception about estate transfers is that they take place quickly. Many assume that they can use the assets in their deceased loved one’s estate without jumping through a lot of hoops. After all, they are assets their departed relative left behind for them.
It is easy to see why people make that assumption. Of course, the transfer of assets is not as simple as that.
For example, wills must first go through the probate process before they are valid in the state of New York. Probate aims to prove that the will presented is an authentic document left behind by the decedent.
Probate stops false wills from impacting the distribution of assets. Ultimately, it is a process that protects the interests of the beneficiaries, but it does present issues.
Chief among those issues is the length of the probate process. Proving that a will is legitimate to the “satisfaction of the court” can take a surprisingly long time.
The probate process typically takes several months. If your heirs do not have an alternative source of income, they may end up in a tough spot as they wait for the process to finish. You do not want your heirs enduring that long wait.
Plan ahead of time so your beneficiaries will have money to use even if the probate process drags on. Give them a financial safety net to use in that scenario.
Estate Planning Is Crucial to Maintaining Privacy
Going through the probate process can be challenging for the surviving family members not only because it takes a long time. The issue of privacy is also a primary concern for many who experience that process.
Any will that undergoes the probate process becomes a public document. Members of the public can examine the will and learn a fair amount of information about the assets it controls. They can also find the names of the people who benefit from the will.
Is it a bad thing if people who have nothing to do with the will learn more about it? That is not necessarily the case. Still, your beneficiaries may feel like having their names put out in public like that is an invasion of privacy.
As the person who always took on the role of protecting your family, you may not want to put their names out there. You may want to keep the affairs of your estate as private as possible. If that is your desire, then estate planning is a must for you.
Form a trust that will hold your assets and use it for distribution as well. Bypassing the probate process is possible in New York State if you keep your assets inside a trust.
Estate Planning Provides You with the Opportunity to Bestow Power of Attorney
Estate planning is useful even before your passing. It is especially useful when it comes to controlling your medical care.
Bestowing power of attorney is an essential part of estate planning. By giving someone medical power of attorney, you authorize them to make important decisions on your behalf.
Using the power of attorney, you can indicate what kind of medical care you want to receive if you ever become incapacitated. Your agent will fulfill the wishes you outlined in the document.
No matter what your wishes are, your agent must follow the document.
The power of attorney document can also give agents the right to complete financial transactions on your behalf. Being incapacitated means you can no longer put the finishing touches on some of your deals. Thankfully, your agent can step in and complete those deals that you have been working on.
Power of attorney is an important privilege you should not take lightly. Consult with your attorney so you can carefully craft that document while you are going through estate planning.
Early Estate Planning Gives You More Flexibility
Lastly, you should also consider diving into estate planning sooner rather than later because it allows you to maintain flexibility.
Let’s say that you decided to give a particular relative a certain amount of money through your estate. At the time, that seemed like a sound decision. However, your view of that individual may have changed, and you now want to cut them out of your trust completely.
Because you put your trust together early, you will have more than enough time to make a change like that. Your lawyer will not need to rush the document to make sure that it will be approved.
If you find that other changes are necessary down the line, you can implement them as well.
Taking care of your estate early on gives you the ability to make necessary changes as circumstances change. That is another reason you should contact an attorney as soon as possible.
We at the Alber Law Group are ready to offer our expertise if you need guidance while planning your estate. Contact us today and let’s start solidifying your plans.