When you hear the term “estate planning,” what comes to mind? For many, it’s an image of the ultra-wealthy meticulously mapping out how to distribute their vast fortunes.
But here’s the truth: estate planning is not just for the ultra-wealthy. In fact, it’s something everyone can benefit from, regardless of their wealth.
It’s simple to understand why estate planning is frequently connected with the wealthy and famous. High-profile cases in the media frequently feature multimillion-dollar estates, intricate trusts, and expensive inheritances.
Unfortunately, this narrow view overlooks an important point: estate planning is about more than money. It is about fulfilling your wishes, safeguarding your loved ones, and providing you with peace of mind.
So, even if you don’t have a lot of money, consult an estate planning attorney to help you put together an estate plan that will give you plenty of benefits.
You have peace of mind.
Perhaps the most significant advantage of estate planning is the peace of mind it brings. Knowing that your wishes will be fulfilled, that your loved ones will be cared for and that your affairs are in order can alleviate a great deal of tension and anxiety.
Estate planning shows love and consideration for the people you care about the most.
You protect your loved ones.
Providing for your loved ones is one of the most critical components of estate planning.
This extends beyond just distributing assets.
It entails choosing guardians for small children, establishing trusts to manage finances for beneficiaries who may not be prepared to handle them, and ensuring that trustworthy individuals make your healthcare and financial decisions if you are unable to do so yourself.
Consider parents with small children. Without an estate plan, the court will determine who will care for your children after you die.
By naming guardians in your will, you can ensure that your children are cared for by individuals you trust the most.
You get to make healthcare and financial decisions
Estate planning includes your intentions for health care and financial considerations. A durable power of attorney and an advanced health care directive (sometimes known as a living will) are essential to any estate plan.
These agreements allow you to designate someone to choose for you if you cannot.
Assume you’re in a circumstance where you can’t express your wishes due to illness or injuries. An advanced health care directive guarantees that your medical care preferences are understood and followed.
Similarly, a durable power of attorney authorizes a trusted someone to handle your financial affairs, ensuring that invoices are paid and financial responsibilities are met.
You minimize taxes and expenses.
While estate taxes are not a concern for everyone, estate planning can help you save money on taxes and expenses.
By structuring your estate tax-efficiently, you can decrease the burden on your heirs and ensure that more of your assets benefit your loved ones rather than the government.
Even if your estate is tiny, there are methods to reduce taxes and expenses with good planning.
This could include taking advantage of exemptions, establishing trusts, or making charitable contributions.
Estate planning tools that you need
There are a few. People frequently use more than one tool, depending on their needs. These tools include:
Last will and testament
This is one of the most popular kinds of estate planning. A final will and testament allows you (the person who owns the estate) to specify how you want the estate handled after your death. A will is relatively simple to create, but there are several conditions for a will to be recognized as legally effective.
Working with an experienced estate planning attorney can help guarantee that these standards are fulfilled. The attorney will guide you in what to include in the will and what to leave out.
One crucial function of the last will and testament is to designate guardianship for any minor children who may be orphaned. If no guardian is named in the will, the choice is left to the courts.
Living will
A living will, also known as an advanced healthcare directive, is something everyone should have. It outlines what you would and would not want to happen in terms of medical interventions as you near the end of your life.
A living will is activated when you become disabled and unable to communicate your wishes, whereas a regular will takes effect when you die. The living will answer concerns about whether you want feeding tubes, artificial respiration, CPR, and other life-sustaining medical treatments.
Without a living will, those decisions could be taken by family members who may either disagree with what you would have wanted or they may disagree with each other, leading to lengthy, costly court conflicts over your care.
Power of attorney
A power of attorney (POA) designates someone else to act on your behalf if you become incapacitated. POAs can be used in a variety of situations, including business transactions.
A healthcare POA is one of the forms that must be completed for an advance healthcare directive. It designates a person you trust to carry out the directive’s wishes. It only activates once you become incapacitated.
A financial POA also names a person legally authorized to handle your financial affairs if you become incapacitated. For example, suppose you are involved in a vehicle accident and finish up in a coma. In that case, the person listed in the financial POA can ensure that your expenses are paid, among other things.
When you die, the POA loses its power, and the traditional will takes effect.
So, who can benefit from an estate plan?
Ultimately, everyone can profit from estate planning. While it is vital for individuals with assets, even those with only a few possessions should consider estate planning.
While it is commonly regarded as a worry for the elderly, younger persons with assets or dependents will benefit as well.
Life is unpredictable, and everyone should be prepared for the worst. It’s better to be proactive and consider your future requirements and aspirations than to leave everything to chance.
Work with an experienced estate planning lawyer Upper Marlboro and put your life in order.