Estate planning is essentially preparing for asset distribution following your death. Although thinking about end-of-life administrative issues is not necessarily a pleasant task, it is certainly one of the most important you can accomplish to give yourself and your loved ones peace of mind.
People who do not adequately plan the distribution of their assets may cause conflict and hardship among family members who may have differing ideas and opinions about how to divide assets. With a comprehensive estate plan in place, you can minimize or even eliminate these conflicts entirely. Here are three benefits of estate planning and why it makes sense to plan ahead.
1. Guiding you through important decisions
One of the first steps in terms of estate planning is also one of the most essential because it involves taking the time to think about your wishes and how you want them carried out when you are no longer able to voice your opinion directly. Estate planning tools identify the tasks you need to undertake. For example, you may need to choose people you trust to fulfill roles such as trustee, executor, health care proxy or guardian. You will need to list your assets and personal property, choose beneficiaries and more.
You may want to speak to your family as you take care of these tasks so that you can distribute objects to those who would most cherish them and avoid conflict after you are gone.
2. Avoiding expensive tax burdens
Another reason people plan ahead is to ensure they minimize any potential tax burdens. State and federal tax laws can be complex, and they change often. Planning for asset distribution in an appropriate way can build in a strategy to ensure that unnecessary tax burdens are mitigated and therefore will not burden the loved ones you leave behind.
3. Providing a voice when you do not have one
Estate planning tools include documents in which you indicate your health care and financial wishes in advance in the event you cannot express them. One example of this is if you become incapacitated and are no longer able to tell people how you want your medical treatment to proceed. A living will helps you avoid placing this burden on your family.