If you should die without a will, your estate will go through probate creating unnecessary legal and financial issues for your family. However, by creating an estate plan, you can ensure that your loved ones, including your pets, are cared for after your death. Here are five estate planning benefits to help you move forward.
1. Avoiding probate
Your estate will be subject to the lengthy and public probate process if you die without a will. Your family will bear the legal costs, which will reduce the amount they ultimately will receive. Since you left no instructions, the court will determine who those beneficiaries will be.
2. Caring for minor children
If you have dependent children, you will want to plan for their care if you and your spouse should die. This is especially important for younger couples or couples with younger children.
3. Minimizing taxes
Smart planning will minimize the tax issues your beneficiaries could face after your death. For example, your heirs can make tax-free withdrawals from a Roth IRA, whereas they would have to pay income tax on the proceeds of a traditional IRA.
4. Planning for pet care
Fido and Fluffy are like members of the family and you can provide for their care in your estate plan. You can even set up a pet trust to name a custodian and to help with the care and feeding of the pets.
5. Distributing assets
You can use your estate plan to tailor inheritances. You can make provisions for a loved one with special needs or for someone not yet mature enough to handle a lump-sum inheritance. Exploring and understanding the available estate planning tools will enable you to create the perfect plan for your specific situation.