Sunday, May 26, 2013

Understanding the Importance of Estate Planning

The purpose of estate planning is to help you achieve your personal and family goals after you pass away. It ensures that your assets will end up in the hands of those people whom you wish them to go to, so that you can reach your personal and financial goals even after you die. You also can reduce the amount of taxes paid by planning your estate in the right way to ensure that your heirs receive a larger inheritance.

The saying that the only two sure things in life are death and taxes has existed for centuries. While no one likes to think about dying, it is a certainty and something that must be faced. An plan for your estate consists of a set of documents that help you plan for taxes and death and it is something that nearly everyone needs -- regardless if their financial and familiar affairs are complex or simple.

The documents that make up an estate plan help you avoid problems that often arise upon your death. Many of these are problems most of us never think of during our lifetimes, or are things that we simply choose not to think of. But if there is no plan in place, these issues are handled by the courts. It is therefore very important to have a plan in place so that you can decide for yourself the best choices for your family, such as who will care for minor children, who will receive your property, and who will finalize your affairs.

Estate planning can be a rather complicated matter, and it does require good judgment to ensure that you achieve the outcomes you desire. It gives you the choice while you are alive to determine who, what, when, where and how your estate will be handled. It also allows for substantial savings when dealing with tax issues, court costs and attorney fees. Planning your estate also helps your loved ones avoid the burden of having to deal with bureaucracy and confusion after you pass away.

Unfortunately, many people do not plan their estates because they believe that they don't need an estate plan or they believe that their family members can handle the task of dividing up their assets. However, if you fail to have a solid estate plan in place to handle the settlement of your affairs after you die, the laws in your state will determine what must be done.

This may result in family disagreements, assets going to the wrong people, and liability for estate taxes that could have been avoided. If you don't have an estate plan in place before you die, your assets and affairs can be tied up for months. It is therefore of the utmost importance to plan your estate with care so that everything is handled properly (and according to your wishes) upon your death.

Planning an estate can be a bit overwhelming. When you have a good plan in place, you are given the peace of mind knowing that all of your affairs will be handled as you wish after you leave this earth.

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