Most people know they should have a will, but an estate plan is so much more than that. It’s a comprehensive set of documents that outlines how you want your assets and responsibilities handled if you become incapacitated or after you pass away. And get this — a recent survey found that inflation has actually caused more people to see the need for an estate plan. Even younger adults are getting in on the action, with just as many of them having a will as middle-aged folks. Yet, only 34% of Americans say they have an estate plan in place. Why the disconnect? Well, a lot of people either lack the motivation or assume they don’t have enough assets to make it worthwhile. But the truth is, an estate plan is important no matter your age or wealth level. Here’s a look at four big reasons why you need to get your estate planning ducks in a row:
1. It’s About More Than Just Your Stuff
When most people think “estate plan,” they immediately think of divvying up their financial assets. But it’s so much more comprehensive than that. Your basic estate planning documents should include things like:
- A power of attorney to handle your finances if you can’t
- A healthcare power of attorney to make medical decisions for you
- A will to outline how you want your assets distributed
- An advance directive to spell out your end-of-life wishes
And if you really want to get next-level, you can also set up a trust to keep your financial info private and ensure your assets are cared for, even if you become incapacitated.
2. It Puts the Right People in Charge
Part of estate planning is appointing the key players who will step in if something happens to you. This includes:
- Your healthcare and financial powers of attorney
- A guardian for your children (if you have any)
- A trustee or executor to manage your assets
You want to choose people you trust implicitly to make decisions in your best interest. And it’s a good idea to have backup options too, just in case.
3. It Can Minimize Taxes
Let’s be real — taxes are unavoidable. But a solid estate plan can help reduce the amount your loved ones will owe after you’re gone. This includes tactics like gifting assets, setting up trusts, and taking advantage of tax exemptions.
4. It Puts You in the Driver’s Seat
If you don’t have an estate plan, the state you live in will essentially create one for you. And that means you have zero control over what happens to your assets and responsibilities. The courts will appoint an administrator, which can be a costly and complicated process for your loved ones. With a comprehensive estate plan, you get to call the shots. You decide who will handle your affairs, how your assets will be distributed, and what happens if you become incapacitated. It’s the best way to ensure your wishes are followed and your loved ones are taken care of. So, what are you waiting for? Whether you’re 25 or 85, talking to a financial professional about estate planning is one of the most important things you can do. It may not be the most exciting task, but it’s a gift you can give your loved ones. Trust us, they’ll thank you for it.