Estate planning is often more than just creating a will. It can include a wide range of steps such as limiting estate taxes, putting advanced directives in place and setting up your funeral arrangements.
Estate plans can play many important roles after you pass away or in the case that you are incapable of caring for yourself.
Estate planning could help you save money
On purpose estate planning can have is saving money on taxes. Federal estate taxes are placed against estates worth approximately $10,000,000 (plus an inflation adjustment) or more in 2018. In 2017, the limit was $5,490,000. The idea behind the high limit is that while most estates aren’t taxed, those with the highest percentage of income in the country are. Despite that fact, many people have estates worth more than they expect, so it can be important to plan early for your assets.
Estate planning can help you establish annual gifting as well, which could reduce the estate’s taxable assets each year. If you’re concerned about hitting the threshold for paying estate taxes, you may want to consider annual gifting earlier in life.
Estate planning can protect your minor children
If you have children under the age of 18, you may want your estate plan to include guardianship information. This information can include the names of people you wish to take over the care of your children if you die while they are minors. You could also include a trust in an estate plan to provide for your children in the case of your absence.
Estate planning can protect your rights
Finally, remember that an estate plan can protect many important rights. Some examples of things you could include in a plan include your choice of an executor to carry out your will, a durable Power of Attorney (POA) and even wishes with respect to your health care if you fall ill.
You may also include funeral arrangement information and update information on your life insurance policies, 401(k) plans and other major assets. With an estate plan in place, there might be a lower likelihood of people challenging your wishes, which means that your estate can be distributed in the manner you decided on.
Estate planning may seem like something you don’t need to do until you’re older, but generally the sooner you start, the better. You can always update your estate plan moving forward, but putting one into place can be an important part of protecting your assets and loved ones. An attorney can help you get started, so you and your loved ones know what to expect if you are unable to care for yourself or pass away.