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Couple reviewing why estate planning matters with help from Amerant Bank
Personal Finances

5 Reasons Estate Planning Matters 

At its core, estate planning determines the preservation, management, and distribution of a person’s wealth, assets, and belongings after death. It involves carefully outlining a clear plan for transferring cash accounts, investments, real estate, business interests, life insurance policies, personal possessions, and more.

While thinking about one’s mortality is an uncomfortable prospect for many, having an estate plan in place is one of the most important things a person can do for themselves and their loved ones. Failing to make these arrangements can lead to completely avoidable complications and burdens on those left behind.  

The consequences of not having an estate plan are significant. In the absence of legally binding documentation, asset allocation can occur in ways contrary to the deceased’s true wishes as dictated by state laws.

Family members can face massive tax burdens that were possible to minimize. Probate court proceedings can drain resources and create bureaucratic nightmares. Perhaps most critically, loved ones can embroil themselves in messy legal conflicts over dividing the deceased’s property and wealth. 

So, how does someone avoid these possible conflicts? Setting up an estate plan with the help of a professional ensures an easy transition for the family in many ways. Other wealth management options exist that benefit a person planning for the future.

The Many Benefits of Proper Estate Planning 

  1. The primary advantage of crafting a comprehensive estate plan is ensuring that the distribution of assets and possessions is precise according to one’s wishes after death. Without an estate plan, the state’s default inheritance laws determine the allocation of a deceased person’s wealth rather than their own stated intentions. 
  2. Right estate planning can significantly minimize taxes and unnecessary expenses for transferring wealth from the deceased to beneficiaries and heirs. Trusts, gifting strategies, and other planning techniques can reduce tax burdens to just a fraction of what they would be otherwise. 
  3. For many, avoiding the probate process for transferring wealth after death is a key motivator for estate planning. Probate is the legal procedure in which a court determines the validity of a deceased person’s will and oversees the distribution of the estate’s assets. It can be costly, time-consuming, and extremely public – airing all details of the deceased’s finances and assets. Establishing a revocable living trust as part of an estate plan allows the transfer of assets without probate, provides privacy, and reduces expenses. 
  4. Creating specific types of trusts, such as asset protection trusts, can shield portions of an estate from potential future creditors, lawsuits, or even bankruptcy proceedings against the beneficiaries. This ensures cherished assets remain in the family’s hands. 
  5. Estate plans enable the continued provision and long-term financial security for loved ones, dependents, and special needs family members. This could include establishing and funding a special needs trust, life insurance policies, custodial accounts for minor children, and investment accounts. 

The Main Advantages of Estate Planning  

More than anything, having a proper and binding estate plan provides an unmatched peace of mind. No one needs to wonder or worry about what happens to their wealth and possessions after death. Every detail is accountable following specific wishes. 

Crafting an estate plan gives individuals maximum control over the allocation and division of their assets upon passing. Defaulting to standard state inheritance laws is unnecessary, which may or may not align with the deceased’s intentions. 

With a comprehensive estate plan created through expert legal counsel, the deceased’s loved ones and heirs avoid unnecessary future burdens and messy conflicts. When a professional helps create a will or trust instrument with full tact and binding legality, there is little room for challenges.  

Under proper channels, estate planning allows assets and wealth to move privately and efficiently without court interference. It can also avoid challenges from potential disgruntled family members or other legal proceedings that can deplete the estate’s value over time. 

Taking the First Steps Toward Estate Planning  

The first step anyone should take when beginning the estate planning process is to speak with a qualified and experienced professional financial advisor or estate planning attorney. They can provide tailored guidance customized to everyone’s unique situation, asset portfolio, and overarching legacy goals. 

Next, taking a full inventory and accounting for all assets for inclusion in the estate plan is critical. This covers cash and investment accounts, insurance policies, retirement funds, real estate holdings, business interests or ownership stakes, valuable personal possessions, and other properties or belongings of significant monetary worth.  

After receiving professional counsel and assessing their full financial picture, individuals must carefully determine their wishes regarding how they want their wealth and assets distributed after death. For those with children, this means deciding what portion each child will receive. You must give the same consideration to relatives, charities, educational funds, and other potential inheritors. 

With goals and intentions clearly defined, the next step is to work with an estate planning attorney to create the necessary legal instruments such as a will, revocable living trust, power of attorney documents for financial and health care matters, and any other vehicles to carry out the predetermined wishes. These documents require occasional reviews and updates. 

Estate Planning Secures Your Future 

When considering the full scope of advantages—from maximizing disbursements to loved ones to minimizing tax burdens, avoiding costly legal pitfalls, and protecting hard-earned assets for future generations—the merits of dedicated estate planning are fundamental. Upholding a legacy as one intends provides control, security, privacy, and perhaps most importantly, peace of mind. 

While contemplating one’s mortality is an admittedly unpleasant prospect for many, delaying estate planning can create far more unpleasantries for loved ones down the road. Take control of this important process now.

Speak with a highly experienced and trusted financial advisor from Amerant Bank today to begin developing a customized strategy to preserve your wealth and legacy according to your specific wishes. With their guidance and counsel, you can craft an airtight estate plan to responsibly ensure the disbursal of assets and care for family no matter the future. 

Editorial Team
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