Only about 4 in 10 adults in America have wills or any other estate-planning document. That’s according to the results of a 2017 survey from Caring.com. Perhaps the most disturbing thing about the survey was that 47% of those who didn’t have these documents said they hadn’t gotten around to thinking about their deaths.
Let’s face it: while preparing estate documents isn’t the most exciting thing to do, death is inevitable. And you want to make sure that your assets are passed on to the right people when you die. And no, you don’t have to be rich or old to have an estate plan.
You need an experienced estate planning lawyer to first and foremost, help you decide which estate-planning documents you may need, and more importantly, help you prepare them. If you are from Chicago, Illinois, the Law Offices of Marc J. Blumenthal, Ltd is always on hand to help you plan your estate.
Here are 4 compelling reasons why you should start preparing estate documents.
1. An estate plan protects beneficiaries
If there’s one reason why you should prepare for the unthinkable, it’s to protect your children. It’s the last wish of virtually every parent is to have their children well taken care of when they are gone. A preparing a will is an opportunity to name a guardian who takes charge of your estate and raise your kids in a way that you’d approve. Otherwise, you leave children in a precarious position.
Even if you do not have kids, there are specific people and causes that you care about that you’d want your assets transferred to. A will ensures that your estate is distributed to the rightful beneficiaries. In the absence of a will, your preferred beneficiaries might lose out in a court battle.
2. An estate plan avoids probate
Assets are usually transferred to beneficiaries through a long, public and court-supervised probate process. If you don’t want to keep your affairs personal and save your beneficiaries from probate, you can hold your assets in a revocable living trust.
A revocable living trust is another estate-planning document which you can use create a trust and transfer all your assets to it.
You become the trust maker (the person funding the trust), trustee (the person holding and managing the trust) and the beneficiary. The essence of a trust is the fact that it’s legally considered as a separate entity. To be precise, it lives on after your death. Therefore, your beneficiaries take over the trust without going through probate.
3. An estate plan reduces estate taxes
If you die and leave behind an estate valued above the exempt amount set by the US Congress, your beneficiaries will be mandated to pay a hefty federal estate tax.
For instance, the exempt amount for 2017 was $5.49 million. Therefore, beneficiaries who inherited estates worth more than %5.49 million in 2017 had to pay about 40% of that value in cash to the federal government.
Through shrewd estate-planning techniques like marital transfers, lifetime gifts to your children, irrevocable life insurance trusts and charitable transfers, you can significantly reduce the size of your taxable estate or even lower it below the exempt amount.
4. An estate plan prevent unnecessary family conflicts
Two things almost always follow the death of someone who doesn’t have a will — ugly and often messy family feuds, and protracted legal proceedings. When you prepare an estate plan, you leave everything in order. In other words, everybody knows what they are getting. This limits unnecessary family conflicts which might spiral out of control.