Preparing for the inevitability of death is often a topic many of us prefer not to think about. However, estate planning is an important aspect of life that you should consider. It goes beyond deciding who inherits your assets; it’s about ensuring your loved ones are cared for, even when you no longer can.
Here are four key ways estate planning can benefit both you and your loved ones, which can help you understand why it’s not just an option, but a necessity as you navigate life’s unexpected turns.
1. Protect Your Children’s Future
In the event of your and your spouse’s untimely deaths, your children’s financial, emotional, and legal needs can be protected with the help of a well-thought-out estate plan. Having an estate plan in place can also prevent Child Protective Services (CPS) from taking your children in an emergency. Instead of leaving your children’s welfare to someone else, you can take matters into your own hands by naming a guardian.
You can also safeguard your children’s financial security and peace of mind after you’re gone by creating an estate plan that specifies who will make choices regarding their medical and educational needs, names a trustee to oversee a trust established for children, controls when and how resources from the trust are distributed and creates insurance coverage.
2. Reduce Taxes
Through careful planning, families can minimize the inheritance tax burden left for their heirs after a loved one passes away. It is possible to reduce the sum of estate and inheritance taxes owed by careful planning of the handover of property from the estate owner to the beneficiaries.
Estate planning also helps reduce the amount of money owed to the state for estate and inheritance taxes. The deceased person’s estate is responsible for paying the estate tax, whereas the beneficiaries or heirs of the deceased person are responsible for paying the inheritance tax.
The estate might pay inheritance taxes owed by a recipient as part of the planning process. Having the money to pay the taxes and keeping more of the estate’s assets is a win-win, but it doesn’t lessen the amount owing.
3. Minimize Chances of Probate
Estate planning helps avoid probate in two ways. First, having a will in place ensures that the deceased’s property is divided according to their wishes rather than the state’s. This safeguards the wishes of the decedent and guarantees that their assets go to the people to whom they bequeathed them.
Second, one can avoid the necessity for a will by naming correct, living beneficiaries on every investment account (such as individual retirement accounts (IRAs), 401(k)s, and other brokerage/bank assets). These designations negate the need for bequests in a will, which can speed up and lessen the cost of the probate process.
A further benefit of estate planning is the speed with which assets can be transferred to heirs. The family can get compensation immediately without dealing with the lengthy probate process. This reduces the family’s financial stress and prevents arguments over money.
4. Make Decision-making Easy
Through careful estate planning, individuals can ease the burden of making important life choices on their loved ones. When individuals receive the opportunity to prepare for the future, they can communicate what they want for their medical care and final disposition. This way, they may rest assured that their final desires will be carried out and their loved ones will not have to go through the emotional and challenging process of making those choices.
If someone is disabled, having a plan in place can help their loved ones and medical staff carry out their wishes. Such choices may include whether or not to end life support for a loved one in a vegetative state and what to do with the person’s body after death.
Making a will and appointing a power of attorney could also be part of this process. These could include anything from a request to be resuscitated in the event of a cardiac arrest to a list of preferred treatments for a terminal illness.
Contact us at Lifetime Estate for estate planning services and consultations in Colorado.