If you have been doing research into estate planning, you have probably learned about what you should include in it. You have probably also heard statistics about how many people do not have an estate plan.
Perhaps it would be more beneficial to explain why you should have an estate plan. The Motley Fool describes several important benefits of estate planning.
1. Planning for dependents
Legally, your dependents include your minor children and any other family members who rely on you for their support. Examples may include elderly parents who live with you or disabled siblings whom you support financially. The law considers pets to be property rather than dependents, but if you die or become incapacitated, someone else will have to take care of them in your stead. Estate planning allows you to name guardians or caretakers for your legal and unofficial dependents as well as set aside money to support them after your death.
2. Minimizing taxes
As of 2021, the federal exemption for estate taxes is $11.7 million, meaning that your heirs do not have to pay taxes on their inheritance if the estate is worth less than that amount. Nevertheless, Congress is currently debating legislation that would lower that threshold. Therefore, if you have significant assets, it can only benefit your heirs to plan your estate in a way that minimizes their tax burden.
3. Making medical decisions
An estate plan is not only for the benefit of those still surviving after your death. You can make arrangements for the health care you want to receive in the event that a medical condition affects your decision-making capacity.
It can be difficult to think about estate planning. However, if you consider the benefits it can offer, it may motivate you to take this important step.