Most people know the primary benefits of estate planning. Having a will ensures your loved ones have the information they need if you pass away. Having a trust offers the advantage of avoiding probate. However, there are other benefits of establishing an estate plan you might not know. Here are seven benefits that people usually don’t think about.
1 Protecting Your Beneficiaries from Themselves
Suppose you have a beneficiary who is young, financially irresponsible or has problems with addiction or debt. In that case, you can structure how and when that beneficiary receives assets. Perhaps you will want to delay when they receive any money until they’re older or maybe set up a schedule so they don’t receive all the money at once. You can save them from burning through the inheritance in hopes they mature or overcome issues that would cause them to do that. In short, you can set up the trust to:
- Distribute funds over time
- Set conditions (like graduating college)
- Appoint a trustee to manage the money
2 Avoiding Family Conflict
I always encourage my clients to be as clear as possible with their instructions to reduce the risk of misunderstandings, resentment, and more. An estate plan should never be vague about asset distribution, even when everyone appears to agree. We have all seen situations where it seemed everyone was fine with the plan, but once the person dies, the family feuds begin. I also encourage my clients to consider not just the high-value assets but those considered “sentimental value.” More than one family has broken apart over who gets an heirloom of minimal monetary value, like grandma’s quilt or dad’s fishing tackle.
3 Protecting Against Incapacity
MANY don’t consider this benefit. Your estate plan can benefit you while you’re still around. For example, if you are in an auto accident and unable to make decisions for yourself or pay bills, your estate plan is the “go-to.” A durable power of attorney and healthcare directive ensure someone you trust is in charge of your finances and medical choices.
4 Minimizing Estate Taxes and Other Costs
You don’t need to be wealthy to benefit from minimizing estate taxes and other costs. Your estate plan can help reduce or eliminate state-level estate taxes, avoid capital gains issues and lessen probate and attorney fees. All good things.
5 Keeping Things Private
Having a will is important but remember, wills go through probate, which is public. That means unless you also have a trust, everything in the will becomes public record, available to anyone who is interested. But if you have a trust, you can keep your affairs and assets private; there isn’t a public record of what you owned or who got what.
6 Protecting a Business or Side Hustle
If you own a business (even a small LLC or freelance gig), an estate plan can be beneficial to you and your loved ones. You can outline who takes over or how things should be handled. You can ensure things keep running smoothly if you are temporarily incapacitated. You can ensure continuity for your customers and employees. Think about what might happen if you don’t include these instructions; this is not a burden you want to put on your loved ones.
7 Special Needs Planning
Suppose you have a loved one with special needs. In that case, your estate planning attorney can guide you as to how best to provide them with financial support without disqualifying them from benefits like Medicaid or SSI. Just naming them as a beneficiary in your will could prove to be a disaster when you were only trying to be helpful. If you have a special needs loved one, definitely discuss this with your attorney.
Were any of these benefits new to you? Maybe one or two? Again, there is so much promotion around the primary benefits of estate planning that these seven can easily be overlooked, but they can also be extremely valuable. If it is time to update or create your estate plan, let’s schedule a meeting soon. We can review your unique situation and put together a plan that is right for you.
I look forward to working with you. Please call me at 513-399-7526 or visit my website, www.davidlefton.com, for more information.