1. Estate planning protects your loved ones
Gone are the days when estate planning was only for high net worth individuals. Now, even the middle class needs to plan. So long you have some assets which you would want to pass on to some persons, it’s important that you make your wishes known by documenting them in a will.
You don’t have to be very wealthy. You just need to have something you have to pass on. Asset transfer forms the bulk of estate planning, and it enables you to protect the financial future of those who are dependent on you now.
The truth is, you may have five real estates but if you don’t document your wish on whom you want it to go to, you would have no say in the end. That son or nephew who is even most deserving of your property may not get anything because you didn’t specifically leave it for them. Without doing estate planning, the court will decide for you who that car or bank account will go to. The court doesn’t know or care to know which member of your family has been more responsible or deserving. They will only follow the predetermined succession.
2. Estate planning protects your minors
Of course, no one prays to die before their kids grow up into adulthood. But the bitter truth remains we have no say over when death should come knocking. For that reason, it’s imperative you prepare for such unpleasant but possible occurrences. And when you have minors, estate planning becomes twice as important.
In fact, by New York law, no child under 18 is eligible to inherit assets. So if you pass away before your kids turn 18, how can you be sure they will enjoy what you intend for them to enjoy? You can, if only you do estate planning now. All you have to do is name a guardian for them in your will. By so doing, this guardian will manage the assets on your children’s behalf until they turn 18. You can choose a guardian that you trust with all your heart. Without you doing this, the court again will step in to decide for you, and again, they would not know what you’d have wanted.
3. Personalizing your plan
Another reason why you need Estate planning is that it enables you make personalized plans. If you have children with special needs, you can make arrangements for them. You can also set up a trust for a child you feel is better not to give them a lump sum. You can choose to give more to the child who cared for you more, and less to those who you’ve always provided for and have taken through school. Through estate planning, you can bring equity unlike the court.
4. Estate planning saves you huge cost of estate tax
Estate planning is all about protecting your financial future and that of your loved ones. This includes giving them protection from huge expenses which they may face. In New York, there is a tax known as estate tax imposed on estates exceeding $5.85 million. A percentage up to 16% would have to be paid from your estate before your loved ones can inherit what you left for them. Obviously, they would not get the full amount of what they’re supposed to get because of the tax.
Proper Estate planning involves transferring assets with an eye towards lifting tax burden from the shoulders of your beneficiaries. There are also income tax and federal estate tax. Without estate planning, your loved ones may end up getting just a fraction of your estate.
5. Estate planning prevents family squabbles
Remember those thriller movies where a man dies and his family begins fighting over his properties? Yes, that happens in real life. And when you didn’t make your decision written in a legally binding document, each family member will feel they have equal (if not more) right to your house and car.
Such squabbles get pretty messy quickly and before you know it, court cases have emerged.
Preventing such bitter tussle amongst your family members is another reason why you need to do estate planning now. Estate planning allows you state who gets what, and they have no option but to take what falls to them.
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