As life passes by, personal assets may grow. Investments are made, and portfolios are diversified. Personal possessions also mount up over time. And you may have strong ideas about who should benefit from your assets after your passing.
With the advent of digital assets such as crypto, writing wills is a more complex matter than before. Estate planning helps to protect assets and ensure that chosen beneficiaries receive them at the appropriate time.
In 2023, proper estate planning is more important than ever.
What is estate planning in brief?
Studies suggest that up to 60% of adults are without a will. Without legal directions, a person’s estate will be divided up as seen fit by a state probate court.
Most people wish for their assets to be passed on to specific loved ones. But, when no legal will is left, the division of assets will be left to the courts. Firms such as Two Spruce Law in Bend Oregon specialize in estate planning to ensure clients’ wishes are upheld after they pass away.
Estate planning is a process of creating a legally recognized plan for distributing assets upon your death. The plan may involve complicated instructions about when beneficiaries will receive their inheritances. It may also include plans for potential incapacity or guardianship.
More than anything, estate planning ensures that your loved ones are looked after upon your passing.
The benefits of estate planning in 2023
Estate planning is very beneficial to anyone who has property and assets they wish to divide among loved ones. It gives control over the distribution of assets even after death. This can help to avoid the probate court and avoid family conflict.
Minimize tax liabilities
When estate planning is done correctly, it could help protect your assets from certain taxes. Legal advice will help you to understand inheritance tax and estate tax better. Proper estate planning will ensure more of your estate reaches your loved ones and not the tax man.
Provide guardianship for young children.
Many people sadly pass on before their time. In the event of your premature passing, your estate plan can put a guardian for your children into place. Anyone you trust may be appointed as a guardian, and this will be included in your estate plan.
Protecting your assets
After your passing, it might not just be the taxman who comes after your assets. Creditors and lawsuits may appear upon your death. Estate planning may protect your assets from potential claims and make sure your loved ones benefit.
Is it necessary to put a trust in place for proper estate planning?
Many people have simple estates. These people can often make a will without a lawyer. However, legal advice is recommended to ensure that chosen beneficiaries receive their inheritance and disputes are avoided.
Trusts allow for more complicated instructions than wills. Yet, establishing a trust is not a requirement for estate planning. A legal will, on the other hand, must be drawn up.
Despite trusts not being necessary, they are valuable estate planning tools. A trust will allow you to choose a trustee to manage your plan. This trusted person will be in charge of executing your wishes and passing on your assets.
For instance, you may want a beneficiary to collect their inheritance only after they graduate. Your trustee will be responsible for managing that inheritance until that time.
Why is estate planning essential now?
As you know, estate planning ensures that loved ones are looked after once you have passed away. The instructions in the estate plan must be unambiguous. This is why estate planning attorneys are needed for these end-of-life plans.
A simple will may be drawn up online with no legal help. But, estates with complex assets and instructions should be dealt with by a licensed attorney. When done properly, estate planning brings many gains. And for many people, an estate plan is useful for avoiding common issues.
Avoiding family disputes
Estate planning can contribute toward family harmony. Your wishes will be clearly expressed through your estate plan. This may help to minimize conflict and disputes. Even if your beneficiaries are unhappy with your wishes, at least your intentions will be made clear.
Avoiding probate
If you pass on without a will in place, your estate will enter probate. Dying intestate and state rules surrounding this might mean your assets never reach your intended beneficiaries. Your loved ones may miss out on valuable assets as the court decides where they should go.
Estate planning helps to avoid lengthy probate by making clear instructions about asset distribution that will be upheld in court.
Philanthropy
Of course, you may wish to leave part of your estate to charity. You may wish for a trust to be set up as part of your philanthropic legacy. Estate plans can incorporate instructions to provide for named charitable organizations.
Planning for incapacity
Instructions may be included in a living trust and estate plans for asset management if you become incapacitated. If you cannot manage your estate anymore, then your appointed trustee will become legally responsible for carrying out your wishes.
Handling digital assets
One reason that estate planning has become more essential is the diversification of investments. With the introduction of crypto, digital assets became a real thing. Since then, NFTs and other digital assets have attracted many investors.
The American Bar Association has made a point of addressing cryptocurrency with estate planning. Crypto itself requires careful instructions so beneficiaries may receive their digital inheritance.
It is estimated that about 6 million bitcoins have been lost forever. Your family may not know you have crypto or how to access it. Therefore, this must be included in an estate plan.
Business succession planning
If you are a business owner, no doubt you will wish to protect your company upon your passing. Estate planning may be used to help with businesses once the owner passes away.
You can include instructions to identify your successor and how business assets will be transferred. A business continuity plan can be integrated into your end-of-life instructions.
Is it important to revisit your estate plans regularly?
It is essential not only to develop an estate plan but to regularly review it and make adjustments.
Reasons to review estate plans include:
- Changes to the law
- Updates to tax regulations
- Family dynamics
- Digital assets
- Poor health
- Financial changes
If your health is starting to falter, then you may need to put in place specific plans for your potential incapacitation. This includes medical decisions and your own care.
Families change, as do finances. A divorce would require changes to your estate plan. If your finances change dramatically, then a review of your estate plan will be necessary.
Your digital assets may increase. You might open additional online accounts that need to be addressed. And there are sometimes changes to laws and regulations that will affect your estate plan.
Summary
For some, having a legal will in place is enough. But, for others, estate planning is essential. If you want your loved ones to benefit from your assets, then an estate plan should be put into place.
The more complicated your estate is, the more necessary estate planning becomes. The wishes in any estate plan should be clear and unquestionable. This way, disputes and probate can be avoided. To ensure an estate plan is drawn up properly, a licensed attorney will be necessary.
Put simply, estate planning is essential for ensuring loved ones are looked after even after you have passed on.
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