Tax considerations are sometimes cited as a reason to have an estate plan in place. While this is certainly a consideration in some instances, it doesn't play a part in others.
Many people don't realize just how important it is to have your estate plan in place when you pass away. Consider these reasons that don't have anything to do with taxes:
- Privacy: Setting up trusts for your heirs means that they don't have to go through the probate process, which can help to keep the terms private
- Protection from creditors: Certain trusts can protect assets from being claimed by creditors, but some won't provide any protection so use caution if this is the purpose
- Guardianship: Parents with minor children can set up plans for those children as part of their estate plan.
- Care for pets: Provisions in the estate plan can ensure that pets are cared for after you pass away
- Plans for incapacity: The living will, advance medical directives and powers of attorney can provide instructions and plans if you become incapacitated
- Control over assets: Your estate plan lets you outline who is going to get what and when they will get it.
Some business owners can use the estate plan to set up a plan for succession. This can help ensure that employees and those dependent upon the business can continue to have an income after you pass away.
As you set the estate plan up, remember that this is an individualized process. You have to set things up in the way that you feel is best for your circumstances.