For the longest time, many people thought that estate planning was just for the affluent or a certain group of people. This is not the case. Estate planning is vital for anybody regardless of their age or the amount of property they have. That’s because an estate is not just mansions and other expensive investments, it also includes things, such as furniture, life insurance, jewelry, etc. But what exactly is estate planning, and why is it important? Let’s find out.
What is estate planning?
Estate planning is basically a process of making the necessary arrangements on how your properly [estate] will be handled in case you become incapacitated or when you die. Your property include things that you own, including your car, home, bank accounts, life insurance, furniture, investments, jewelry, among many other things.
An estate plan allows you to decide how your property is distributed among your loved ones. So if you don’t have it, you will not be able to decide who gets your property. The plan arranges all your affairs and leaves a written document of your wishes and desires. You can create an estate plan with the assistance of durable power of attorney.
With that said, let’s take a look at some of the reasons that make estate plan important
1. It allows you to choose who inherits your property
The top reason that makes an estate plan crucial is that it allows you to choose who inherits your assets. In case you are no longer there, your assets will be distributed according to your wish. But if you don’t have an estate plan in place, the court will decide how your property is distributed. Of course, this can be very nasty and even lead to inheritance disputes, especially if somebody that shouldn’t inherit your property gets their hands on it.
2. It protects your minor children
If you have minor children, you want to make sure that they are financially protected even if you are not there. Death is inevitable, and it can happen anytime. What happens after? If you have small children, you need to prepare for such a tragedy. Part of getting prepared is creating a will, which is part of estate planning. In your will, you will be able to specify who will take care of your children in case you are not around. In case you don’t do that, the court will pick a guardian who will look after your children.
3. To avoid probate
When you die without leaving a Will, it means that you have died “intestate.” In such a case, your state’s law will determine what happens to your property and who distributes them. The court will name a representative who will distribute your assets. But with a durable power of attorney, you can pick an executor of your property when drafting your Will.
The probate process can be very lengthy with lots of paperwork. It can also cost the surviving family members a lot of money. Thankfully, you can prevent all these by creating an estate plan.
4. It gives you peace of mind
Having an estate plan can give you peace of mind. That’s because you will know how your assets will be handled when you are still alive or when you are no longer around.