Estate planning is important as a component of your financial life. But many people put it off because the topic upsets them or they think they are not rich enough or old enough to worry about it. But it is something vital for everyone to take care of. In this article, we will go over some of the many reasons why estate planning is important.
Directs Your Wealth Where You Want It
In Arizona, if you do not have a will or trust, your assets will be distributed through the laws of intestate succession. This means that your wealth will be distributed to your next closest class of living relatives. That might be your children, siblings, or parents. When this happens, the court does not take into account if one of these individuals are irresponsible. To prevent this from happening make sure you have a will or trust that outlines your wishes.
Prevents Family Issues
If you detail your wishes and outline them in estate planning documents, it also helps to prevent family issues when you pass. Unfortunately, when people pass families tend to bicker. Sometimes this fighting can end up in court. Court costs can add up, reducing your estate and delaying distributions to your families. Many wills and trusts have no contest provisions. This means that if anyone files contestation paperwork with the court they will be disinherited. This helps to keep fights from unnecessarily going to the courts.
Protect Minor Children
If you are a parent, it is important that you prepare in case something unfortunate happens and you are unable to be there for them. You will need to name a guardian for your minor children, which is someone to care for your children if you are not able to. A good estate plan will also set your funds up property so that your children can immediately have their financial needs cared for. A lack of an estate plan can leave guardian choice in the hands of the court. It can also cause an extreme delay in getting your funds to your children, which can cause a huge burden on the guardian. All of this can be avoided by appointing a guardian and setting up and funding a trust.
A major reason why estate planning is important is so that your estate can avoid probate. The fees for probate are expensive and can add up very quickly. Probate also causes a delay to distribute assets. In Arizona, four months is the soonest that you are able to give out distribution checks. That is the best case scenario. Most estates take at least a year before distributions are made. A will does not help you to avoid probate. However, a revocable living trust can help your estate to avoid the issues that came with probate.
Plan Your Estate
Now that you know why estate planning is important, it is time to plan for your estate. To get the process started, meet with a qualified estate planner who can help you get your documents in order.
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