Your estate will generally comprise of all the real and personal property owned by you at the time of your death that has not been already distributed by trust, wills, or intestacy laws. Estate planning allows you to determine the way your estate will be transferred at the time of your death.
However, there are several other things that count as “purpose” for estate planning. These include:
Protecting Assets and Property
Estate planning allows you to protect your assets and properties along with the interests of your beneficiaries long after your death from any possible creditors and external claims to property that may emerge in the future.
Whether it’s the surviving spouse, your children, a cause you support, a distant member of the family, or a group of different individuals—estate planning gives you the freedom to choose the people your estate will be transferred to once you die. In the absence of an estate plan, the property transfer is dealt according to the state’s probate law.
Making Known Medical Wishes
Estate planning also allows you to give health care directives that ensure your medical wishes are known and will be performed as defined if and when you are unable to take your own health care decisions.
Taxes Involved In Property Transfer
Normally, your beneficiaries are liable to pay inheritance tax on your estate. Every dollar paid as tax is the money your beneficiaries are deprived off. Efficient estate planning can minimize the applicable taxes and ensure that the beneficiaries receive the maximum estate allowed by law.
The probate process is time consuming, tedious, and expensive. In addition to that the probate court workings are infuriating slow and coupled with tons of paperwork. Also, probate papers become public knowledge and may create privacy concerns for your beneficiaries. All this however, can be avoided if you plan your estate beforehand.
Providing For Children or Other Family
Your surviving spouse, your children, or any other member of the family can be the designated beneficiary of your estate. Your estate can be used to provide for their living, education, and upbringing expenditure. In case of children younger than 18, you even get to designate guardians who would be responsible for upbringing after you.
Wealth and Asset Management
As external influences and circumstances change after your death, it is easier for your beneficiaries to lose out on the wealth you left them. Through efficient estate planning you can devise a thorough wealth management plan that ensure the proper execution and management of your wealth and helps your beneficiaries build upon it.
Not having an estate plan would mean that your estate will be transferred according to the state laws.