Why Estate Planning Is Important
by Unbundled Legal Help
Death is inescapable, ubiquitous, and inevitable. With this morbid truth in mind, most people feel rather uneasy about making plans for their eventual demise. However, waiting to create an estate plan can spell disaster for you and your family.
Estate planning is important for these reasons:
- Helps you plan for your individual needs
- Gives you a way to dispense your money as you see fit
- Can Minimize estate taxes and probate fees
- Helps you develop a long term strategy for charitable causes
- Protects your family's wealth
- Eliminates family fights over your wishes
Though death is not a popular topic, it is a necessary one. Proper estate planning can alleviate stress, fighting, and confusion for your family and loved ones. If you have not yet developed a comprehensive estate plan, we can connect you with an estate planning lawyer in your area to discuss your needs.
Learn more about the importance of estate planning below.
What is an Estate Plan?
An estate plan is essentially a series of documents that give instructions about how you want your assets to be handled when you pass away, as well as how you want health and financial decisions to be made should you become incapacitated.
A detailed and comprehensive estate plan can help ease your anxieties about the future. It can ensure that your loved ones have a clear plan, are financially taken care of, have minimal taxes, etc. Failure to create an estate plan could lead to frustration and complications for your loved ones after you pass away.
Parts of an Estate Plan
There are six essential parts of an estate plan. They include (but are not limited to) wills, living and revocable trusts, personal property memorandum, durable powers of attorney, healthcare powers of attorney, and living wills. Learn more about each below.
- Will: The will is the cornerstone of most estate plans. In the will, an executor (personal representative) is named to carry out the distribution of your assets when you pass away. You can also name guardians to take care of minor children in a will.
- Living or Revocable Trust: Trusts are not only for the rich. Revocable trusts (also called living trusts) give you more control over your assets so they work in a manner that is beneficial to you and those who will receive your assets upon your death. Speak with your estate planning lawyer about different types of trusts.
- Personal Property Memorandum: This document allows you to give personal items to others upon your death. These items are typically not listed in a will or trust. Examples of gifted items can include furniture, clothing, artwork, exercise equipment, jewelry, etc.
- Durable Power of Attorney: This document appoints an agent to act on your behalf in the event of death or incapacitation for legal and financial matters. This is typically a close friend, relative, or trusted advisor.
- Healthcare Proxy, Agent, or Power of Attorney: A healthcare power of attorney is appointed to make medical decisions on your behalf when you cannot. This document also gives access to your health records. Though some states require more documentation.
- Living Will: A living will declares your wishes for end-of-life care. The living will covers topics such as pain management, feeding tubes, ventilators, and resuscitation orders.
It is important to remember that everyone’s estate planning needs are different. Depending on your financial situation, type of assets, and distribution desires, you may need many more documents. It can be beneficial to consult with tax advisors, financial planners, and estate planning attorneys who will help guide you through the estate planning process.
Why Do I Need an Estate Plan?
Regardless of your wealth or type of assets, estate planning can be beneficial for those of various financial backgrounds. Unfortunately, recent studies suggest that nearly 40% of people do not have any type of estate planning.
This can lead to disaster for your family if they are left to sort out your affairs without any direction. Estate planning is important for financial planning, asset distribution, tax minimization, charitable giving, and protection of family wealth. Learn more about why estate planning is important below.
Planning for Your Needs
While there is a lot of information in an estate plan regarding where your money goes when you die, there are also many other considerations included. It can also be helpful to plan for your needs should you become unable to make decisions. Discussing your intentions is not always enough. Creating an estate plan helps to ensure that your wishes are carried out.
Disperse Your Wealth as You Want
Those that don’t have an estate plan in place will leave the decision for how their assets are distributed and other important end-of-life matters to a judge. A well-documented estate plan helps ensure your assets are distributed as you like. Furthermore, it can help protect your family and friends from the emotional and financial consequences of not having a plan in place.
Minimize Estate Taxes and Probate Fees
An estate tax is a financial fee placed on an estate based on its current value. The estate tax rules vary in each state. Federal estate taxes must be paid on assets that are more than $11.4 million.
However, some states have lower limits. It is important to note that assets transferred to a spouse are typically exempt from estate taxes. Furthermore, recipients of estate assets may be subject to inheritance taxes.
Probate fees are fees paid to the government based on the total value of the assets in your estate. Each state sets a limit for how much probate fees are. Sound estate planning can help you and your beneficiaries avoid or minimize estate taxes and probate fees.
Support a Charitable Cause
Some would call this a form of “legacy planning,” and in many ways, it is. Your estate plan can play a vital role in how you are remembered after you pass away. This can be accomplished through setting up a charitable trust and potentially allowing it to immediately begin working in the charity’s favor (before you are incapacitated or die).
Setting up a charitable trust can be complex. It is best to consult with your financial planner and estate lawyer before creating a charitable trust.
Protect Your Family Wealth
No matter if it is a lot of wealth or a small amount, your wealth can be beneficial to the next generation. Estate planning helps preserve your family’s assets and wealth by removing your name from them. This can protect your assets from lawsuits, and sometimes creditors by putting them into trusts or limited liability entities.
Eliminate Family Fights
When a death occurs in a family, it can sometimes bring out the worst in people. This is especially true if the deceased person does not leave behind a clear plan. Detailed estate planning helps eliminate family fights before they have a chance to begin.
Your estate plan allows you to designate who controls your finances, makes health decisions, and has legal authority in the event of your death or incapacitation. Furthermore, it can help you make plans for minor children and decide where your assets go.
How Soon Can I Start Estate Planning?
There is not a specific age or asset requirement to begin estate planning. A comprehensive estate plan can be beneficial for anyone. This is as true for the person with millions in assets as it is for an individual with very meager means.
Depending on your needs, there are certainly differences in the depth and detail of an estate plan. However, to ensure clarity in financial, health, and power of attorney matters, it is best to have an estate plan. It can start simple, and as your finances grow, you can make changes. What’s important is that you have some type of official plan in place.
Must I Hire an Estate Planning Lawyer?
Planning for your death can be scary and complicated. Nonetheless, the more prepared you are, the better it will be for you and your family. Even if you don’t own any assets, it can be beneficial to appoint a durable power of attorney and a health power of attorney. Estate planning lawyers provide many benefits such as:
- Documentation creation and review
- Estate planning advice
- Ensuring your wishes are ironclad
- Help with choosing a power of attorney, executor, and/or trustee
- Understanding estate laws in your state
If you are among the nearly 40% of Americans that have yet to create an estate plan, it’s never too late. That is until it’s too late. Contact a proven estate planning lawyer in your area and take advantage of their free initial consultation to learn how estate planning benefits you.
What Does it Cost to Create an Estate Plan?
Many people choose to forego estate planning or create a plan on their own due to the high costs that can be associated with creating an estate plan. For the most part, there are not many fees. However, the cost of an estate planning attorney may be expensive.
The average estate planning lawyer charges between $2k - $7k upfront, plus additional hourly fees. Needless to say, many people believe that they are saving money by not hiring an attorney. While this may be true in the short term, it’s usually best in the long term to have an attorney help you.
Fortunately, with unbundled legal services, you can hire an estate planning lawyer in your area and save money at the same time. Learn more about the benefits of working with an unbundled attorney below.
Save Money with an Unbundled Attorney Today
With unbundled legal help, you can hire a proven estate planning attorney to help with parts of your estate plan, while you save money by taking care of much of the rest on your own.
For example, you may feel comfortable downloading a personal property memorandum form and completing it on your own, nevertheless, you should consider contacting an attorney to discuss setting up a trust.
Fees for unbundled estate planning lawyers start as low as $500-$1500. This means that you will not have to pay thousands of dollars in upfront fees when you hire an unbundled attorney.
If your estate planning needs are more complex, our network of unbundled lawyers offers comprehensive estate planning services at affordable rates.
Before you pay thousands of dollars in upfront fees, consult with an unbundled estate planning lawyer today