Estate planning is not just for the ultra-wealthy – everybody needs one! Irrespective of your financial status and family dynamics, you will benefit by having an estate plan. An estate plan can not only protect your assets after you pass away but also during your lifetime in case something happens to you. Let's look at the reasons why you need an estate plan even if you don't have many assets.
- Protection of Family Wealth
During your lifetime, your assets can be challenged in a number of ways. Wealthy people are highly susceptible to frivolous lawsuits, but proper estate planning can protect you and your family's wealth against legal turmoil. You can safeguard your wealth with trusts or other legally-protected documents.
- Preparing Future Generations for Inheritance
Estate planning can be a complicated and emotional process for most people, but by starting early, you can prepare yourself and your family for a variety of situations. Proper estate planning allows you to have open and honest discussions with your children about your family wealth. It will also help you in preparing the future generations for the wealth they receive.
- Minimizing Transfer Taxes
With estate planning, your wealth will be transferred to your loved ones in a tax-efficient manner when you die. There are three major types of taxes that you need to consider while transferring your money: generation-skipping transfer tax, gift tax, and the estate tax. An estate plan can outline a wealth-transfer strategy to minimize the taxes owed by your estate.
- Maintaining Privacy
Without an estate plan, it is highly likely that your assets will become public information when you pass away. If a situation arises in which a probate court is required to settle your estate matters, your assets can become public. Privacy is extremely important, but you don't want it to become a blockade, especially in our increasingly digital world. You should compile a list of passwords and account information for your family members that will only become available to your them if you die or become disabled.
- Planning for Your Philanthropic Goals
Using proper estate planning, you can ensure that your philanthropic intentions are implemented after you're gone. You can set up a charitable trust, a family foundation, or some other organization to support the causes you believe in. It is important to plan sooner than later if you want to make sure that your wealth will be used in the way you intend. You can make your philanthropic intentions known to your family members and also involve them in the process.
It's important to seek the advice of a trained and experienced financial advisor due to the legal complexities associated with estate planning. For more information on this and other family or estate planning law matters, the Tyra Law Firm is here to help. Contact us today at (301) 315-0811.