When you think of an estate, you may not think that you have much to deal with and plan for, especially if you are currently renting an apartment or living at your parents’ house. However, estate planning isn’t solely set aside for the extremely wealthy – people of all ages and financial situations can benefit from creating an estate plan.
Organizing and distributing your assets may not be the number one thing on your to-do list when you are in your young 20s or early 30s. However, getting all of your ducks in a row once you become an ‘adult’ is a crucial step in your financial planning.
Three Reasons Estate Planning Is Important
More than just a Will
Estate planning involves more than just creating a Will for what happens when you pass away. Both wills and estate plans provide detailed instructions and wishes for how your goods and valuable assets should be distributed after your death – however, estate plans encompass much more about your life, such as:
- Names power of attorney to make medical and financial decisions on your behalf
- Medical directives to clarify what type of medical treatment you want if you become unable to decide
- Explains who should receive money from policies, retirement accounts, or other financial accounts
- Names one or more trusts to pass property to your heirs and provide tax benefits to your chosen beneficiaries
Reduces time and money spent
If you do not create a will or spend some time on estate planning before you pass, the laws of the state are officially in charge of who receives your assets. Not only will they often not choose the way that you would have, but the probate court can spend a long time distributing your assets.
No one can touch your assets or carry out your directives during this time, meaning that all of your hard-earned possessions and money will be sitting idly. You can avoid all of this by doing the following:
- Ensuring your investment accounts have beneficiaries
- Create a Will that names an executor
Avoid hefty tax payments
Estate planning helps prevent hefty estate taxes associated with your property and assets. State taxes pose a high inheritance tax, meaning individuals will have to pay on any property or asset over a certain amount of money. You can prevent your property tax from being passed onto your heir by setting up trusts or establishing joint accounts.
Taking care of your estate plan soon rather than later can save you time and money. Here at JK. Winters P.C. we can help you with estate planning, quickly and efficiently. Since estate planning will not only save you money, avoid tax payments, and allocate powers of attorney and trusts, it’s crucial to prepare for your future.