Most people view estate planning as a way to make sure assets are distributed according to their wishes following their death. While this typically is the main reason to start the estate planning process, there are several lesser-known advantages of having an estate plan in place. Following are eight benefits of estate planning you may not be aware of.
#1 – Reduce your heirs’ tax exposure.
Proper estate planning can help minimize your loved ones’ estate tax burden. Strategies such as charitable giving, gifting to loved ones and utilizing a trust can reduce your heirs’ gift and estate tax liabilities and ensure a greater portion of your assets are available to your beneficiaries.
#2 – Protect your loved ones’ privacy.
Proper estate planning can help ensure your private information does not become a matter of public record. For example, a will does not protect your loved ones’ privacy, because the terms of the will become public record as part of the probate process. This means potentially anyone can see details about your assets, your heirs and who will receive what. Fraudsters can use this information to target your loved ones once they receive their inheritance.
In contrast, having a trust in place allows your loved ones to avoid probate and maintain their privacy.
#3 – Protect yourself.
Estate planning can help you prepare for an unexpected disability or incapacitation. Documents such as powers of attorney and advanced healthcare directives allow you to appoint trusted individuals to make financial and medical decisions on your behalf, should you become unable to do so on your own.
#4 – Minimize family conflicts.
Estate planning allows you to clearly share your wishes in order to prevent misunderstandings or disagreements among your heirs.
#5 – Support charitable organizations.
Proper estate planning helps facilitate a tax-efficient transfer of assets to your favorite charitable organizations. Vehicles such as donor-advised funds (DAFs), charitable remainder trusts (CRTs), charitable lead trusts (CLTs) and private foundations can help you maximize your charitable impact.
#6 – Provide for a family member with special needs.
If you have a loved one with special needs, it may make sense to implement a special needs trust to help supplement his/her quality of life without interfering with eligibility for government benefits, such as Medicaid and Supplemental Security Income (SSI).
#7 – Transition your business.
If you own a business, proper estate planning can help facilitate a smooth transition to your successor owners following your death, retirement or incapacitation. This smooth transition ensures your business can continue to operate with minimal disruption to employees or customers.
#8 – Support your adult children.
Did you know that once your children reach age 18, you will no longer have access to their medical information or be able to make medical decisions on their behalf? In fact, you may not even be allowed to visit them in the hospital following an accident or illness.
Similarly, if your adult child becomes incapacitated for a period of time, you will not be able to access his or her financial accounts, school records or other credit and financial information, unless you have the proper documents in place.
Once your children reach the age of majority (18 in most states), encourage them to establish both a healthcare power of attorney and a financial power of attorney. These documents allow you to access information and act on their behalf, should they become incapacitated and unable to do so on their own.
If you are looking for an advisor to help implement your estate planning strategy, we would love to have a conversation. To learn more about how United Capital Financial Advisors can help you plan for the future, please contact us.
