An estate plan is your opportunity to indicate how you want your property, belongings, and financial assets distributed after you die. Without a written plan, you leave these personal choices up to state law and probate courts.

 

An estate plan is more than just a will

• Designates durable powers of attorney to watch over and handle your medical and financial decisions
• Outlines medical directives should you be unable to voice your desires
• Clearly outlines the beneficiaries from your insurance policies, annuities, retirement accounts, etc.

 

An estate plan keeps you in control and your assets moving

• If the state assigns your executor, your assets are frozen until all matters are reviewed, which could take months to years
• Probate court and the associated processes aren’t free, and expenses will most likely be covered out of your estate

 

If you’re wealthy, taxes will need to be paid

• Beyond federal estate taxes that don’t begin until you have assets valued over $12.06 million (up from $11.7 million in 2021), state estate and inheritance taxes could take a chunk of your estate
• If you have a business, a high-value life insurance policy, or substantial property, come 2026, you’ll face a $5.49 million/person federal estate tax exemption
• Setting up trusts and irrevocable gift accounts can lower your estate value and keep governments from taking a share of your estate

 

Finally, an estate plan can protect you even before you die because it includes the durable power of attorney and healthcare proxy. Without these living will components, your directives become muddy and make it difficult for decisions to be made on your behalf. Worst case: the court appoints someone you don’t know to make decisions on your behalf.

Adapted from Business Insider3

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3 https://www.businessinsider.com/personal-finance/why-is-estate-planning-important