Thinking about your own mortality can be frightening, especially when you’re concerned about who will take over ownership of your assets, care for your pets and children, and ensure your wishes are met. These fears are valid, and many people have not had their wishes fulfilled because they didn’t create a legally binding estate plan. While you might be daunted by the prospect of meeting with lawyers to discuss your estate, some of the following things might happen if you don’t.
The Wrong People Could Take Over Care of Your Dependents
When you work with an estate planning law firm, you have a say in where your children and pets end up, even after death. However, the same might not be true if you haven’t implemented an estate plan. Typically, when you haven’t made arrangements for dependents, the courts decide who receives custody. Their ruling might go against what you might have hoped would happen to them, causing your children or pets great distress when they end up somewhere unexpected. The law firm you choose can do its best to ensure this doesn’t happen.
Your Spouse Could Lose Their Home
If you own your own home but share it with your spouse, your living arrangement doesn’t automatically mean they will end up in possession of it when you die. They might live with you, but if you’re the sole owner, they might not have any legal recourse for claiming it as their own. Sometimes, the worst can happen, and your spouse can end up without somewhere to live after the courts rule in favor of parents, children, and other relatives. You might be able to avoid this complicated and stressful process by outlining the wishes for your property in your estate plan.
Your Beneficiaries Might Have to Pay More Taxes
Inheritance taxes, estate taxes, and capital gains taxes might all apply to your assets and money upon your death. Inheritance tax is levied by some state governments and comes into play when a beneficiary of your estate receives their inheritance. Capital gains tax is set at a state and federal level and is enforced when a beneficiary sells an asset they inherited, while estate taxes are only due when an estate is worth more than $11.7 million.
Estate lawyers understand how these taxes work and how you might be able to reduce them. They might recommend transferring your estate into a trust, looking at a Roth conversion to minimize IRA taxes, and making charitable gifts up to $15,000 before your death.
Your Family Might Fight
Money can cause a great deal of stress, with nearly three-quarters of Americans experiencing financial stress at least some of the time. You might think that not having enough money is the only reason to stress, but money in an estate can also cause significant issues for families. If you don’t have clear instructions for your assets and money upon your death, family members might fight over what they believe they are entitled to. An estate plan might avoid any confusion.
It’s easy to assume that your loved ones know you well enough to understand and obey your wishes, but that’s not guaranteed. By putting an estate plan in place, you might avoid a significant amount of stress, pain, and heartache for those closest to you.
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