People who do not have estate plans, often wonder why they should get one. People want to know what they and their family can get out of an estate plan. In large part, this depends on individual circumstances.
What assets a person has, how valuable those assets are and who they should go to after the person passes away, all make a big difference in answering why a person needs an estate plan. There is not a general answer that is truly going to be applicable to everyone.
However, there are three basic categories of reasons for why people should get an estate plan, as Forbes points out in "The 3 Reasons Why People Do Estate Planning."
Those reasons are:
- The first reason is to lower costs. Estate planning can help avoid having an estate go through probate, which can be an expensive process. Another thing it can do is to lower tax burdens on estates and heirs.
- Therefore, money that would otherwise be lost, stays in the estate for heirs.
- The second reason for estate planning is to protect assets for heirs. Wanting to make sure your assets are not lost paying for nursing home care, is a reason to plan your estate. You can also use trusts to protect some assets from being lost for other reasons.
- The third reason is to manage and control who will get your property after you pass away and how they will receive it. This includes more than just giving property directly to heirs. With estate planning, you can also make sure it is a challenge for an irresponsible heir to waste their inheritance.
Reference: Forbes (May 21, 2018) "The 3 Reasons Why People Do Estate Planning."