WHY ESTATE PLANNING IS IMPORTANT
READ TIME: 4 MIN
Estate planning can be one of the most misunderstood aspects of financial planning, however, it’s a vital part to ensure your assets and family are protected. Unfortunately, many people believe only the wealthy need plans, or they already have a will and that is enough. Everyone needs an estate plan.
Joshua E. Hummer, Esq. is the founder of Atlas Law*, and he has been a practicing attorney for over 15 years. While experienced in many parts of the law, Joshua specializes in estate planning, estate administration, and elder law. We reached out to Joshua for this months’ topic and he shared with us this information on why an Estate Plan is important:
1. You Need an Estate Plan to Distribute Your Assets
To control how your assets will be distributed when you die, you need an estate plan. If you don’t have one, the state government will step in and distribute your assets according to their default rules. And most people want to control how their personal property is divided rather than have the government take charge. Even if you don’t have many assets, you likely have at least one possession that holds value, whether it is a small bank account, an insurance policy, an old house, or a piece of land. You may not own enough to need a complicated estate plan, but you will need to use at least a couple of simple estate planning tools to distribute what you do own.
2. You Need an Estate Plan to Care for Your Loved Ones
Estate planning is not solely about distributing assets. It is also an opportunity to prioritize the wellbeing of your loved ones and use your death to care for them. We call this kind of estate planning Relational Estate Planning®. If you approach estate planning with the mindset that it is not only about distributing your assets, but also about passing on your values, your legacy, and your love, the end of your life can be your last gift to your family, friends, and circle of influence. It’s not that Relational Estate Planning® doesn’t see your assets as important. Rather, it views them as tools to care for your loved ones, instead of making them the primary focus of your plan. Death provides a unique opportunity for you to impact your family and close friends, and that’s what your estate plan should prioritize. Using a combination of traditional tools, such as wills and trusts, and non-traditional tools such as ethical wills, the gifts and memories list, and the estate guide and inventory, Relational Estate Planning® helps you:
- Protect and provide for loved ones
- Avoid conflict
- Leave a legacy
- Preserve special memories
- Ease burdens related to your passing
3. You Need an Estate Plan to be Prepared for the Future
This is the ultimate reason for estate planning. You need a plan for your assets, and you need a plan for your relationships, but more generally, you need to be prepared for whatever the future may hold. Death and aging can feel scary and overwhelming, and it’s easy to avoid thinking about them. But without a plan, you risk all kinds of end-of-life issues, such as making things hard for your family, paying too much in taxes, having the state take control, people fighting over your possessions, and more. When you create a thorough relational estate plan, though, the opposite is true. Being prepared means you no longer leave things to chance. Instead, you ensure that things go as smoothly as possible for your family, that the instructions about your assets are clear, and that you are the one in control-not the government. Believe me, the confidence and peace of mind you will experience by being prepared will be well worth the effort.
Estate planning is important for everyone, regardless of age, net worth, or how many relationships you have in your life. If you have even one small asset, and you have at least one other person you care about, you need an estate plan. At this point we have hopefully convinced you how important an Estate Plan is. Atlas Law has a recent blog on their website that gives a great picture of what is involved What Does Estate Planning Include? – Atlas Law
Another important thing to remember is Estate plans are not meant to be “one-and-done” documents. They should be reviewed regularly and updated following any major life event such as a birth, death, marriage, divorce, or move to another state. Beneficiary designations trump wills and should be revisited regularly. The beginning of the new year is a great time to review your plan. A complete plan should include an up-to-date list of all digital accounts with usernames, passwords, and security questions. Atlas Law also has a great check list they have shared with us that can help you review, update or revise your plan if needed 2022 estate planning checklist
Estate planning can be complex. No matter the age, with so much at stake, it’s crucial to have things set up appropriately to protect against the loss of money or time stuck in probate. We are happy to work with you, your attorney and tax professional to secure and make the most of your legacy, please reach out if we can help!
*Information and links shared with the permission of Atlas Law and Joshua E. Hummer, Esq.
The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation.