Why is Estate Planning Important to You?

why is estate planning importantAre you one of those people who secretly wonders, “why is estate planning important?” When you talk to friends and family about the topic, you all agree that it is something you should do, but deep down inside, you are wondering…


Why is estate planning important?

Why should I care?

Here are 5 reasons that estate planning is important. But before I get into that, let me explain that estate planning is important for anyone. You needn’t have a lot of money, or kids, or even a spouse.

You see, estate planning is more than just getting a will drawn up. If done correctly, your estate plan isn’t just a set of documents to store in a drawer somewhere.

You are buying much more than that.

You are buying peace of mind

A quick story about the benefits of estate planning

I finished up a plan with a client today, and after we finished I asked him what he felt that everything I did for him was worth. In other words, how much value did he receive from my office for the work we did for him. At first, he struggled. He was trying to tie the value to the tangible things that he received.

After all, here are just a few of the things he received:

  • A comprehensive plan that dictates what would happen in the event of his death OR disability
  • Temporary guardianship paperwork that would make sure his children never end up in the custody of the state
  • A completed financial worksheet that outlines where all of his financial and other assets are located in the event of his incapacity or death
  • Detailed instructions and templates on how to properly fund his trust
  • A lawyer to answer all of his questions and guide him, step-by-step, through the entire process
  • His first Legacy Conversation, recorded and placed with his other documents
  • Cloud-based storage of all of his documents to ensure they are never lost, with backups on CD and in the office of your’s truly

But this isn’t a strong measure of value. And as I pushed him on the issue, here is how he responded…

He said that he couldn’t really put a price on what the planning we did for him was worth. He said that he received value in the form of the peace of mind he got from having all of this finished and knowing that his family was taken care of. In all honesty, he couldn’t put a price tag on that…

So back to the 5 reasons that estate planning is so important…

Why is Estate Planning is So Important? Here are 5 Reasons…

There are many reasons why estate planning is important, but here are 5 of the most commonly cited reasons people give for wanting to put an estate plan in place.

1. Avoiding a financial and emotional mess

One of the reasons that I decided to form an estate planning practice is that I saw, first hand, how disorganized and chaotic my mother’s estate was.

My Mom had an estate plan in place, but it was a simple plan and could have been done better.

If you fail to have an adequate estate plan, you are costing your family and loved ones a substantial amount of time and money when you pass away.

In addition, if you are incapacitated, but do not die, then by failing to put a plan together you are leaving decisions about your health and well-being up to either the State or your doctor – not the people you want deciding if you live or die.

2. To Protect Your Minor Beneficiaries

Most people are unaware that if they leave money to a minor it must unless they direct otherwise in their will, be accounted for by the court system until there is none left, or your child turns 18 – whichever comes first.

This means that the money must be put in a bank account, and that the guardian or conservator responsible for those funds (someone picked by the court), must send an accounting to the court at least every year detailing how they spent the money until the child turns 18 or 21 (depending on the laws of the state where you live). This can be expensive, not just on legal fees, but also on the guardianship fees related to managing the money in the trust.

3. To Protect Beneficiaries from Unforeseen Creditors

Asset protection planning is a very important reason to prepare an estate plan. You worked hard for your money, and you want to make sure it goes to the people you want it to go to. By putting together an estate plan, you can make sure that your heirs are protected and that your money will benefit them, and not their creditors.

And make no mistake, a creditor can take many forms. It could be the credit card company your son or daughter owes thousands of dollars to or the divorcing spouse who cheated on your adult child, or unforeseen plaintiff who is looking to sue one of your heirs for any number of reasons.

4. To make sure that your money stays in your family

An all too common scenario is when one spouse passes away, leaving everything to the other spouse. The understanding is that the widow or widower will amend their plan and pass whatever is left on to the children.

Except they forget, and then they get remarried. And if something happens to your spouse, their new spouse gets everything and your children get left out.

Estate planning can solve this problem for you so that you can keep your money in your family.

5. Avoiding Probate

I put this one last because avoiding probate it typically one of the major reasons that people want to put an estate plan together. However, what people really want is to avoid the things that come with probate, such as the hefty cost to probate an estate and the public nature of the proceedings.

But by putting together a solid and comprehensive estate plan, you can make sure that your personal life never makes its way into the public probate court.

Why is Estate Planning Important to You?

As you read through this list, you may find that one or several of these reasons really resonate with you. Whatever the case may be, if you do not currently have an estate plan in place, or if you are just interested in learning more, feel free to fill out our contact form and a representative of our office will follow-up with you to discuss your options.

Ready to move forward now? Feel free to call us at (919) 460—5422 to set up a wealth planning session today.