Estate Planning - What It Is & Why It's Important
The dictionary may be to blame for the level of confusion surrounding the necessity of estate planning. Most, when they hear the word estate, immediately associate it with lavish wealth and riches. And that’s not technically wrong. The first definition you’ll see when you look up the word estate is an extensive area of land in the country, usually with a large house, owned by one person, family or organization. But if you look to the second definition, that’s when the necessity of estate planning will click into place.
All the money and property owned by a particular person, especially at death.
What is estate planning?
Simply put, estate planning is the process of planning out what exactly will happen to all your stuff – your money, property, dependents, etc — if you are to become incapacitated or in the event of your death.
The old cliche you can’t take it with you when you die is quite literally true. So estate planning allows for you to make arrangements in advance. Estate planning is your opportunity to provide instructions on how you want your estate – large or small, lavish or modest – to be managed and distributed. And chances are, you’d like for your estate to be managed and distributed with the least amount spent on taxes, legal fees and/or court costs.
Why is estate planning important?
In the event of your death or you become incapacitated, without an estate plan, or more specifically a will, the laws of your state will determine what happens to your possessions. And more importantly, the courts will decide who gets custody of your children.
Ultimately, there are a few reasons why estate planning is especially important.
Avoid probate.
Protect beneficiaries.
Avoid a mess.
Avoid probate
While you may not have experienced probate chaos firsthand, you’ve likely heard horror stories. It seems everyone knows someone who has been personally victimized by the probate process. And most want to avoid it at all costs. That alone is reason enough to seek the advice of an estate planning attorney.
Protect beneficiaries
Whether you are looking to protect a minor beneficiary or an adult beneficiary, estate planning can help your loved ones avoid costly fees and poor decisions.
When it comes to minor beneficiaries, you’ll want to designate a guardian and trustee. For adult beneficiaries, you can create an estate plan that will help prevent poor money management or untrustworthy spouses from ruining your beneficiaries’ inheritance.
Avoid a mess
Sadly, when a loved one dies or becomes incapacitated, without an estate plan, a mess typically ensues. The lack of an estate plan usually results in a lot of time and money wasted along with unnecessary additional stress and heartache.
Choose someone to be in charge should you become mentally incapacitated or you pass away. Decide in advance who will get what, when they will get it and how they will get it. Doing so will prevent costly probate court proceedings and family discord.