A comprehensive estate plan offers a wide range of benefits, such as protecting surviving loved ones, ensuring that one’s wishes are followed, or reducing taxes. While the primary focus of the estate plan depends on every individual’s unique needs and circumstances, there are some common benefits for everyone.
A well-drafted estate plan ensures benefits even before one’s death: it protects assets for the use of an incapacitated person by placing them in a trust managed by a responsible trustee; it lets one designate an agent to make health and financial decisions during incapacity; and it allows to design a retirement strategy by assessing and organizing one’s assets and financial needs.
With a good estate plan, a deceased’s person’s family is spared from having to make difficult decisions such as when or if to withhold life supporting treatment or how to handle a loved one’s remains. These difficult decisions can be made in advance in one’s estate plan for the family to follow and thus alleviate some of the burden from the family during the grieving period. Furthermore, clearly and transparently expressed goals and wishes for the final distribution of one’s estate helps remove some of the emotion and conflict associated with the division of money and other assets.
Very importantly, an organized and funded estate plan ensures that one’s family is instantly protected: there is enough money immediately available to pay bills and other living expenses; financial affairs are organized and the accounts are accessible to the loved ones immediately, without awaiting probate and the court’s permission; the guardians for the minor children are appointed and their grief and trauma is not further amplified by uncertainty of their future; special needs children and adults are provided for with a trust that can supplement their needs in addition to their governmental benefits; and young adults’ education is secured with a college fund.
A comprehensive estate plan is also crucial for business owners. Without an estate plan, or at least some succession plan, the business can fail quickly after the owner’s death, ultimately causing a financial hardship for the decedent’s family. An estate plan can provide the rules and instructions for the business to transition to a new owner and assure its continuity.
In addition to lessening the expenses associated with probate court costs and attorney’s fees, a good estate plan may help reduce taxes by developing the most tax-efficient approach. There are various tax reduction strategies that can be implemented to minimize the amount of taxes collected on a decedent’s estate, which results in more money being available to the surviving family. Oftentimes, qualified financial advisor or tax professional should be involved in the estate planning process to achieve one’s goals.
The estate planning process can also provide for the support of one’s favorite charitable causes after death. One must not leave most of their estate to charity. But even the smallest gift can make a big difference and shape the way a person is remembered. Legacy planning can be as simple as a one-time financial gift or it can be structured as a charitable trust, a family foundation, or a scholarship fund.
Life is unpredictable. At least some uncertainties and concerns can be addressed with a good estate plan that offers a wide range of benefits intended to protect one’s well-being and family’s wealth. It is never too early to prepare oneself and one’s family for unforeseen challenging situations.