Estate planning is beneficial for the average individual, but most people don’t create a will, trust or other estate documents for their own needs. Instead, it will be concern for their spouse, children or other close loved ones that motivates them to put together a formal estate plan.
Families derive numerous benefits from advance estate planning, and the four benefits below are among the most for the average testator. What benefits will a family derive from estate planning efforts?
Protection from familial conflict
Probate conflict is a common complication after someone dies. Siblings may turn against each other, or children and stepparents may end up fighting in ways that do irreversible damage to their relationships. When someone has very clear instructions for the distribution of their property and the care of their loved ones when they die, then there will be less room for disagreement and conflict after they pass.
A potential reduction in taxes
Those with large estates may have to pay estate taxes in some cases. The transfer of their largest assets could also trigger inheritance taxes for their beneficiaries. Taxes can reduce how much of an estate passes to beneficiaries and can impose another hardship on those already grieving and adjusting to the loss of a loved one. Careful estate planning that seeks to minimize the overall value of the estate or facilitate low-tax transfers of key assets, including business and real estate holdings, can help people maximize what their loved ones inherit.
A reduction of collection activity
Careful estate planning prior to retirement can help protect those living on a fixed income from collection activity initiated by their creditors. That same planning can help protect someone’s assets from debt collection efforts after they die, including Medicaid estate recovery efforts in some cases.
Peace of mind for the whole family
The adults in the family will feel more comfortable when they know that there won’t be any financial or legal uncertainty about what to do after they die. Children don’t necessarily need to know all the details to understand that an estate plan means that they will have protection if anything ever happens to their parents.
Extended family members also derive protection from the stress people may experience if a loved one dies or has a medical emergency without an estate plan in place. Living documents can be particularly beneficial for the peace of mind of someone’s extended family, as they won’t have to worry about making medical decisions or trying to recall someone’s preferences unless designated to do so in someone’s power of attorney or advanced directive paperwork.
Understanding the main benefits that families receive from the estate planning process can inspire someone to finally address what will happen if they die or have a medical emergency of some sort.