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What Is Estate Planning and Why Is It Important?

Estate Planning

Did you know that the average person pays around $2,500 in property taxes per year? From property taxes to personal assets, you should be thinking about who will handle these financial obligations when you’re not around.

That’s why it’s so critical to invest time into mapping out a plan for your assets and debts, no matter how old or young you are. What is estate planning? Stick around to learn why it’s beneficial — and how to get started.

Consider Your Financial Assets and Debts

As you delve into estate planning, start by taking stock of your financial picture. Consider assets, like your primary house, vacation homes, or other significant possessions. Also, consider your investment holdings and retirement plans you may have through an employer.

Do you have life insurance? Do you have student loans or credit card debt? Factor in policies or debts you hold to build a complete financial picture.

What Is Estate Planning?

Essentially, estate planning is determining how to allocate your assets — and deal with debts. Even if you’re not wealthy, it pays to put time into determining who gets what. You’ll ensure that the most responsible individuals gain access to your assets.

Develop a strategy to pay off debts so your beneficiaries aren’t stuck with them. You can ease the tax burdens, too. A skilled attorney can help you minimize inheritance taxes as well as income taxes.

Protect Your Beneficiaries

Thinking of your loved ones can help you understand the importance of estate plans. When you’re gone, you want to ensure that children or other loved ones are provided for and protected. You don’t want them to inherit debts or get entangled in family fights over your assets.

Without an estate plan, your family may need to let the courts decide who gets what. For families with a lot of friction, this can deepen wounds and drag out in court.

You can appoint guardians for your children through an estate plan, too. For instance, you can make sure that your most responsible brother would be a legal guardian if something happened to you.

Develop a Basic Estate Plan

Aside from a will, determine who will make significant fiscal or medical decisions if you cannot. Someone without a lot of assets or heirs can draft a simple plan and obtain death designation forms for financial accounts. For those with bigger families or more assets, the scope of an estate plan will grow.

When it comes to estate planning tips, a big one is to work with a qualified attorney. Visit this location to gain access to knowledgeable professionals. They can help you create legally sound documentation and designate beneficiaries.

Know the Benefits of Estate Planning

Are you still wondering, “What is estate planning?” Think of it as a way to distribute your assets and cover debts. Most importantly, estate planning is a service to minimize the burden on your loved ones when you’re not around.

Keep building your financial literacy. Come back to find more fresh articles soon!

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