As you are going through life handling your day-to-day responsibilities, estate planning may never cross your mind. Indeed, few people are sitting around contemplating their own mortality. At the same time, you probably don’t spend much time thinking about damage to your home or car, but you carry insurance.
The point is, you never know what lies in store around the next twist in the road. Everyone passes away at some point in time, and there are those who die before their time. You should certainly take action to protect the people that you love as soon as you become a responsible adult.
Let’s look at three compelling reasons why estate planning is a core responsibility of adulthood.
Things Don’t Automatically Fall Into Place
You could assume that the government will make sure that your assets get into the appropriate hands if you pass away without an estate plan. There are intestate succession laws that would be used to determine the way your assets would be distributed after final debts were paid.
However, families can be complicated, and these laws are very basic. In the end, people that you love could be disinherited or shortchanged if you don’t have an estate plan.
Money Can Be Lost
There are estate planning techniques that can be used to protect assets from legal actions, and there are also estate tax efficiency strategies that can be implemented. High net worth families have to be concerned about the federal death tax and its 40 percent maximum rate.
Plus, a close relative who is a poor money manager could squander his or her inheritance if a lump sum inheritance was passed along through intestate succession laws.
On the other hand, if you take the right steps from an estate planning perspective, you can protect the assets that comprise your estate and provide for your loved ones in a safe and effective manner.
You can also lose everything paying for nursing home care late in your life. Medicare does not pay for long-term care, and most seniors will need it. There are steps that you can take to protect your assets from devastating nursing home costs.
Incapacity Can Strike
Facilitating asset distributions after you are gone is at the core of the estate planning process, but you should also prepare for end-of-life issues. Many people become unable to handle their own affairs late in their lives.
To account for this, you can name a representative to act on your behalf through the execution of durable powers of attorney. You can also add a living will to state your preferences with regard to the utilization of artificial life-sustaining measures.
The Importance of Estate Planning
Download our in-depth special report if you would like to obtain some additional information about the importance of estate planning. The report is free, and you can click this link to get your copy: Free Estate Planning Report.
Mr. Kraft assists clients primarily in the areas of estate planning and administration, Medicaid planning, federal and state taxation, real estate and corporate law, bringing the added perspective of an accounting background to his work.