Why is Estate Planning Important?
I field questions from clients with all sorts of backgrounds--elderly, young, lifetime employee, entrepreneur, married with kids, single with pets, etc., but I get the "why do I need estate planning" question frequently, so I thought I'd address it here.
Most people never take the time to consolidate their personal and financial information in an organized or meaningful way, much less think through things such as who will take care of their children or how their assets will get distributed after they pass away. One of the great benefits of estate planning is that it allows you (and your family) to not only get a holistic view of your financial situation, but also how that ties into your family situation. Having a game plan for when the eventual (death or incapacity) happens can bring a sense of calm and allow you to focus on living your day to day life knowing that your loved ones will be taken care of. More tactically, estate planning can help to minimize the taxes and other costs that are incurred as a result of death, which leaves more for your family.
But it doesn't end there. There are other benefits as well.
In addition to having a plan, you will develop a relationship with the estate planning lawyer who will serve as a confidant and adviser that helps you navigate the myriad of legal and personal issues you may encounter over the course of your life. Remember that an estate planning lawyer has probably seen the situations you are facing hundreds, if not thousands of times. Moreover, he or she will be there to help you and your family through the administration of your estate.
A tertiary benefit of estate planning is that it can serve as a reminder of your financial situation and goals. Because a major component of estate planning is determining how your assets are going to be distributed, it's only natural that you would consider how you are saving for things such as retirement or caring for your children. Estate planning is often a big wake-up call for those who've let long-term financial planning fall by the wayside. I strongly believe in diligent personal financial management and try to bring that perspective into my consultations where it's appropriate.
Thinking about estate planning can be daunting, especially if you feel like there's simply too much information to compile. My answer is to start with something basic. Having an estate plan, though it might not be perfect, is much better than having no plan at all. Estate planning documents are also amendable, so if things in your life change, the documents can be updated to reflect those changes. Often cost can be a major hurdle to engaging an estate planning lawyer, but there are many solutions that can be tailored to how much you can afford to do. I encourage you to contact an estate planning lawyer to get an assessment of your situation.