Estate planning can be difficult to think about, let alone plan for. Maybe you’ve avoided putting together a concrete plan because you don’t want to think too far into the future when it’s time to pass on what you have. Or maybe you don’t think an estate plan is necessary because you’re not rich enough to warrant one.
The truth is that you will probably leave behind things for your family that are important financially and emotionally. You don’t have to be a billionaire to have an estate plan set up–all the assets and things you have accumulated over the course of your life can be given to your family members to help them through their own financial journey. However, the transfer of those items comes down to the details, and it can get messy without a plan.
Without a specific plan in place, it can be a complicated, lengthy, and sometimes costly process for your heirs to get what you leave behind.[1] If you have no specific plan in place, a probate court will decide how your assets are distributed, and the way they distribute those things may not be the way you expected or may not be settled in an equitable manner.[1] Estate plans can help you avoid these types of problems because they give you control over exactly how your assets are distributed.[1] They can also help to streamline the process so your heirs don’t have to wait for the courts to designate how your assets are distributed.[1]
The other main reason your estate plan is important is taxes. An estate plan may help you to distribute your wealth in a way that reduces the tax burden on your loved ones.[1] Every situation is different, and this isn’t always true, of course. But there are some financial situations where an estate plan can help you to strategically reduce the amount your loved ones have to pay in taxes when they receive their inheritance.[1]
[1] https://www.investopedia.com/articles/wealth-management/122915/4-reasons-estate-planning-so-important.asp
