The Importance of Estate Planning
Many of you reading this post already know the basics: There are wills, there are trusts, and there are varying opinions on what documents or approaches to an estate plan are best.
Many of you may also feel it’s all a bit unnecessary – you may even ask yourself something like “Do I really need an estate plan?”
After all, “my kids know what I want done.” Or “They’ll figure it out – no need to pick who is in charge now and offend someone.”
Let’s talk about why leaving it to your heirs to ‘figure out’ is likely a poor decision.
The Why
Failing to plan can create quite a mess! For starters, without a plan in place, exactly WHO is in charge of your estate depends on who petitions the Court first, and who has priority to serve under the default rules of Minnesota probate law. This means that a creditor may be able to be in charge of your estate if nobody else steps forward.
The default rules also apply to how your property is distributed. If you are part of a blended family, or there is a surviving spouse, or there are other reasons why your plan may be different, the default rules may have disastrous consequences.
Your heirs may also not fully receive the benefit of your lifetime of hard work. Incorrect beneficiary designations or a lack of full planning may result in uneven distributions, significant taxes being withheld from IRA and retirement accounts, and significant court and legal costs that take away from your legacy.
But this can all be avoided with a thorough and personal estate plan fitting your family and financial situation.
Putting together a comprehensive estate plan accomplishes a number of related objectives:
- A good plan provides guidance to your heirs, administrators and advisors as to how to distribute or manage your personal possessions, wealth, and real property upon your demise.
- A good plan provides for all of your assets – and makes sure that any unique distributions or asset classes are handled according to their specific qualities or to avoid certain tax implications.
- A good plan also makes sure that your will or trust, and beneficiary designations for life insurance, retirement accounts, and other assets are all coordinated to match the same goal.
- A good plan not only determines who will manage your estate when you pass away, but also who can manage your affairs and medical decisions if you were to become incapacitated during your lifetime.
- A good plan limits expenses, plans for potential tax issues, and makes the administration of your estate as easy as possible for those left behind.
- Finally, a good plan is made for YOU. Every family and financial situation is different – cookie cutter approaches, downloaded forms, and advice from a blog alone are unlikely to properly address your unique concerns.
If you would like to learn more, please contact our office today to speak with one of our estate planning attorneys.