Protecting Your Assets and Loved Ones. Estate planning was formerly seen to be a necessity for just the wealthy, but times have changed. These days, a lot of middle-class families have to make plans for the day when their family's primary provider (or providers) pass away. Ultimately, one need not possess immense wealth to succeed in the stock market or real estate, as both generate assets that one would wish to bequeath to their successors.

An Estate Plan Protects Young Children

No one ever considers passing away at a young age, yet parents of small children must be ready for the unimaginable. This is when an estate plan's will section becomes useful.

If both of your parents pass away before your children turn 18, you should designate guardians for your children to make sure they are raised in a way you approve of. The courts will decide who will raise your children if you do not leave a will designating them guardians.

An Estate Plan Spares Heirs a Big Tax Bite

The primary goal of estate planning is to safeguard your loved ones, which includes shielding them from the Internal Revenue Service (IRS). Transferring assets to heirs while trying to minimize their tax burden is a crucial part of estate planning.

• Couples can save a significant portion, if not all, of their federal and state estate taxes as well as their state inheritance taxes by engaging in even minimal estate planning.
• There are also options to reduce the amount of income tax payable by the beneficiaries.
• Without a plan, the amount that your heirs will owe Uncle Sam could be quite a lot.

An Estate Plan Eliminates Family Messes

Let’s face it, we’ve all been there. Someone with a lot of money passes away and a family squabble erupts. One sibling thinks they deserve more than the other, or one sibling thinks they deserve to run the family’s finances even though they’re the one who’s most likely to rack up debt. This kind of squabble can quickly spiral out of control and wind up in court, where family members are pitted against each other.

Another reason an estate plan is important is to prevent conflicts before they arise. An estate plan allows you to determine who will manage your money and possessions if you become mentally disabled or pass away and will help to prevent family squabbles and make sure your assets are managed as you would have wanted.

The Bottom Line:
It is crucial to have an estate plan in place to ensure the protection of your assets and loved ones in the event that you are no longer able to do so. Failing to have a plan in place could result in significant tax implications for your heirs, as well as the courts determining how your assets are distributed and who will care for your children.