An Estate Plan is necessary so that you, rather than the Court, control your estate and the disposition of your assets upon your death.
A complete Estate Plan will help you manage your assets, avoid probate, safeguard your children from a prior marriage, potentially save a lot of money on federal estate taxes, appoint a Guardian for your minor children, and keep your affairs private. Estate planning is especially crucial in second marriages with children from a previous marriage, to ensure that children are not mistakenly disinherited.
Consider the following 4 reasons to save your heirs from potentially devastating situations:
An Estate Plan Protects Young Children
Nobody wants to consider dying early, but if you have little children, you must plan for the unthinkable. This is where an estate plan's will component comes into play.
To ensure that your children are cared for in the manner you desire, appoint guardians for them. If both parents die before the children reach the age of 18. The courts will decide who will raise your children if there is no will naming the guardians.
Avoid Paying Unnecessary Taxes
When you die, the assets and treasures in your name become your estate, and the value of your estate can be taxed at both the federal and state levels.
Depending on where you live, you may wish to utilize a trust to save your estate from these taxes, as a greater tax payment leaves less money for your heirs. Because tax liability varies by state, it's critical to understand the rules that apply where you live.
If You Become Incapacitated, Protect You
Estate plans can protect your possessions and family members not only after you die, but also while you are still alive. For example, if you are unable to make decisions in your best interests, someone having power of attorney over your accounts and assets can act on your behalf to conduct business, manage bills and other financial obligations, and sign off on legal papers that require your signature.
Healthcare proxies or advanced healthcare directives should also be included in your plan. These agreements can include essential medical demands, such as "do-not-resuscitate" directives.
Without an estate plan, the foregoing decisions, including who obtains custody of your children, would be made in probate court (a court that handles estate affairs). A probate judge may finally decide how your financial accounts, property, and anything of value will be divided among interested parties, as well as who will be appointed guardian of any youngsters or dependents.
Probate court proceedings are also public record, although wills and trust documents are not. Furthermore, because the probate process is a court of law, it opens the door to litigation and debates amongst relatives and friends who may disagree on how your assets should be allocated. You can avoid these issues with a clear will and trust as part of an estate plan.
Hiring a Michigan Estate Planning Attorney to draft the relevant documents can help you create the best estate plan for you. Work with someone in your state, as rules governing items like wills and trusts differ depending on where you live—or ask your employer if they can assist. A workplace legal plan may provide easy access to qualified estate-planning attorneys to assist you in getting started.