Estate planning is important because it helps you to prepare for whom or where you want your assets to go when you pass away. Alternatively, when you fail to execute an estate plan, the state in which you live prior to your death makes this important decision for you. However, there are other reasons as to why estate planning is important.
5 Reasons for an Estate Plan
1. You can avoid probate
Probate is a legal process in which the court distributes your assets when you die. This distribution is based upon your Will if you have one; otherwise, if you do not have one (and die “intestate,”) the state law of California will be imposed.
The reason that many wish to avoid probate is because it can be an extremely long and expensive process that can last for years (generally taking one and a half to two years to complete) – especially now that they are backed up due to COVID-19. Additionally, the fees associated with the probate process are commonly 3-5% of your estate.
2. You can choose your own beneficiaries
Another important reason for estate planning is to choose who you wish to receive your assets. These individuals are called “beneficiaries.” If you pass away without a Will or trust, your assets will pass according to California’s intestacy laws. Under these state laws, your assets will go to your spouse if you have one, and/or your closest blood relative. It’s important to note that even if the state would pass your assets to those you wish to receive them anyway, it doesn’t mean that those individuals will receive the percentage of your assets that you desire.
3. You can put whom you want in charge of your estate
Creating an estate plan is also great because it allows you to select the individual who you wish to be in charge of your estate. This individual has many names dependent upon the type of document over which they preside as well as the circumstances. They may be called: the Trustee for your Trust, the Executor for your Will, and the Attorney-in-Fact or Agent for your Durable Power of Attorney. This individual must then follow the terms of your legal document(s) in order to ensure that your wishes are appropriately carried out.
4. You can select a guardian for your young children
If you have young children, estate planning takes on a whole other importance. For parents of young children, your estate plan can serve to appoint a guardian to raise your children on your behalf should you pass away unexpectedly while they are still young.
5. You can avoid certain taxes and protect certain assets
There are other reasons why estate planning can be very beneficial. Individuals who have larger estates can potentially avoid both estate and income taxes, while those with careers in professional fields may be able to use estate planning as a means of asset protection. Furthermore, individuals who wish to gift assets to a beneficiary who is financially unstable can create estate plans that actually protect the recipient from him or herself.
While each person’s main reason for estate planning may differ, it is an important tool for ensuring that your wishes are appropriately carried out.
Biddle Law Can Help Those in CA to Create a Comprehensive Estate Plan
When you wish to create a comprehensive estate plan, it is vital that you do so correctly in order to ensure that your wishes are legally enforceable. In order to achieve this, you should consult with a qualified attorney who can answer any questions you may have and walk you through the process. At Biddle Law, we care about your future and want to assist in protecting your interests. To learn more or to schedule a consultation, contact us today!