People who do not have estate plans often wonder why they should get one. People want to know what benefits they and their family can get by setting up an estate plan. In large part, this depends on individual circumstances.
What assets a person has, how valuable those assets are, and who they should go to after the person passes away, all make a big difference in answering why a person needs an estate plan. There is not a general answer that is truly going to be applicable to everyone.
However, there are three basic categories of reasons for why people should get an estate plan, as Forbes points out in “The 3 Reasons Why People Do Estate Planning.”
Those reasons are as follows:
- The first reason is to lower costs. Estate planning can help avoid having an estate go through a court monitored probate, which can be an expensive process. Also, a properly designed estate plan can lower tax burdens on estates and heirs. Therefore, money that would otherwise be spent on taxes and attorney will remain in the estate for heirs and beneficiaries.
- A second reason for estate planning is to protect assets for heirs. Ensuring that your assets are not wasted paying for nursing home care is an important reason to carefully plan your estate. You can also use trusts to protect some assets from being lost for other reasons, such as divorce, bankruptcy, or lawsuit.
- The third reason is to manage and control who will get your property after you pass away and how they will receive it. This includes more than just giving property directly to your heirs and beneficiaries. With a well-designed estate plan, you can also make sure it is a challenge for an irresponsible heir to waste their inheritance.
However, when considering an estate plan, remember that having medical and financial decision makers is important regardless of your age or how much money you have in the bank. Accidents, illnesses, and injuries that make it difficult or impossible for you to handle medical or financial decisions can occur regardless of your age or finances. A comprehensive estate plan should always address these concerns as well as the three reasons described above.