Do you have an estate plan? Or are you waiting until you get older? What is “older” enough? You never know when accidents may happen, so it is always a good time to create an estate plan. Here is why:
1. It is not just a will
An estate plan is more than just a will! Estate planning encompasses other things such as a power of attorney, beneficiaries, and health care directives.
2. Save time and money.
If you pass away without a will, you die “intestate,” meaning the state statutes, as interpreted by the court, will decide what happens to your assets. In creating an estate plan with a will or trust, you can ensure your belongings are taken care of and divided according to your wishes. This is especially important when you want to leave assets to an individual or charity that is not your spouse or child or if there is someone you specifically want to omit from your estate.
3. Avoid large taxes
Minnesota does not currently have an inheritance or gift tax, but it does have an estate tax and there are potential income tax ramifications if you have a traditional IRA or 401k type account that pre-tax money went into. In creating a comprehensive estate plan, we talk about options to reduce or mitigate these taxes or how to have your estate plan to pay taxes on your behalf.
4. Protect your children and assets
You do not want to worry about what may happen to your children when you pass away. An estate plan can help you feel at ease, knowing that what you love most will be taken care of as you wish. Guardianship provisions for minor children can be dictated in your will along with a trustee or conservator to manage the assets for minor children.
5. Take care of yourself
An estate plan does more than protect your assets; the documents allow you to plan for what happens while you are alive but unable to manage your affairs due to illness or incapacity. Validly executed documents allow you to appoint someone to make healthcare decisions for you if you cannot communicate. You can also appoint the same someone or another individual or professional to make financial and other important decisions for you if you are temporarily or permanently unable to handle them.