Insurance is Great, but Do You Have an Estate Plan?

For many people, insurance policies are a must-have. Aside from the obligatory car insurance, some people choose to carry a handful of other policies ranging from health insurance to life insurance, and various forms of liability protection. While these policies can be quite useful in your daily life, they won’t protect your assets after you die, but an estate plan will do just that.

If you see the value in protecting your assets, and you don’t already have an estate plan, here are some of the best reasons to get one as soon as possible.

  1. An estate plan isn’t just for preserving wealth

Did you opt not to create an estate plan because you don’t have enough wealth worth preserving for your family? While the most common motivation is wealth preservation, that’s not the only reason to create a plan, nor is it the most important.

If you get injured or fall ill and become incapacitated, estate planning will ensure that you receive the proper care according to your wishes. For example, if you have a medical emergency and can’t speak for yourself, you’ll need a legal document to direct your care if you have specific needs and wishes. This is why everyone, regardless of their age, will benefit from having an estate plan.

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  1. A will isn’t enough

You can’t rely on a will alone to have your assets distributed to your loved ones the way you would like. In fact, just having a will – especially if you create it on your own – might put your assets in jeopardy.

For example, if your long-term care bills pile up, a will won’t protect your assets from being used to pay them off. You can leave everything to various people, but if your creditors decide to seize your assets, they’ll take priority.

A will also won’t reduce or eliminate your beneficiaries’ need to pay estate taxes. If you’re trying to make sure your heirs get specific assets, like a house, they might not be able to afford the taxes and might need to sell the property to cover what they owe.

With a strategic estate plan, you can help your beneficiaries keep their inheritance and facilitate a faster transfer than going through probate. It’s also harder to contest an estate plan compared to a will.

If you plan on leaving assets or money to someone with special needs who also receives money from the government, you need an estate plan to do it correctly. The same is true for leaving money to heirs under 18 because the court will probably need to appoint a guardian to oversee the distribution of funds, which will just complicate the situation for everyone.

A will is an important part of an estate plan, but it’s not enough by itself.

  1. An estate plan can include a trust

There are many components to an estate plan, and trusts are key. Without a trust, your assets will likely go through probate and it might be many months before your heirs get what you’ve left them. There’s no guarantee the court will approve your will as-is and distribute your assets exactly as you wish.

Holding your assets in a trust will bypass probate, making it easier and faster for your heirs to receive their inheritance. A trust will also protect your assets from creditors. Wills are public documents and your creditors can intervene to ask the court for their cut. On the other hand, trusts are private documents that aren’t accessible like wills.

If you have family members likely to argue over your will, putting your assets into a trust will prevent them from contesting your will in a court battle. Your wishes will be carried out according to the trust, and it won’t matter who disagrees.

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  1. An estate plan includes a Power of Attorney (POA)

In addition to documents detailing how you want your assets to be distributed after you die, it’s critical to have a designated Power of Attorney. Your POA will have the legal right to act on your behalf when you are unable. Without a POA, important decisions could be left up to a court, and they might not make decisions in line with your wishes.

POAs can make decisions regarding financial and real estate transactions, and any other legal decisions in your name.

Protect your heirs’ inheritance with an estate plan

Now is the perfect time to connect with an attorney and get an estate plan written up. No matter your age, and regardless of how much wealth you have, it’s a move that will protect your heirs and your assets from the complexity of legal battles after you pass away.