Have you put off creating an estate plan because you didn’t think you really needed one yet? If so, you are not alone. Despite understanding the importance of inheritance planning, over half of all Americans do not have even a basic estate plan in place. Like you, most of them are under the impression that they don’t have a large enough estate yet to warrant an estate plan and/or that the cost of creating an estate plan isn’t justified. You don’t need to have a valuable estate though to benefit from estate planning. Moreover, not having an estate plan in place often costs your loved ones much more than creating one would have cost you. Often, the strongest motivation for inheritance planning is knowing how it will help your loved ones if something happens to you.
What Is Inheritance Planning?
As the name implies, inheritance, or estate, planning refers to creating a plan that will determine what happens to your assets when you are gone. A comprehensive estate plan, however, can do much more than just decide who gets what when you are gone. It can also do things like protect you and your loved ones in the event of your incapacity, plan ahead for your retirement and the need for long-term care, and even address specific concerns such as special needs planning or business succession planning.
How Your Loved Ones Benefit from Your Inheritance Planning
One reason people tend to put off creating an estate plan is the simple fact that they prefer not to dwell on the eventuality of their own death. While this is certainly understandable, it is important to remember that your death will affect your family and other loved ones. For this reason alone, it is important to sit down and create an inheritance plan. Doing so will benefit your loved ones in numerous ways, including:
- Having a funeral plan in place. Having to make important decisions regarding your funeral and burial while they are still grieving your loss would be very difficult for your loved ones. By including a funeral plan in your overall estate plan, you can save your loved ones from having to make these decisions when they are emotionally not prepared to do so.
- Ensuring that funds are immediately available through non-probate assets. Upon your death, your estate must go through the legal process known as “probate.” Assets required to go through the probate process will be tied up or months, even years, until the probate process reaches a conclusion. Some assets, however, are not required to go through probate. These non-probate assets pass immediately to the intended beneficiary upon your death, providing much needed funds for your loved ones to survive on while the rest of your estate goes through the probate process. Some common examples of non-probate assets include:
- Assets held in a trust
- Proceeds of a life insurance policy
- Certain types of jointly held property
- Accounts with a designation of “Payable on death (POD)” or “Transfer on death (TOD)”
- Providing transparency with regard to inheritances. If you die without an estate plan in place the Massachusetts intestate succession laws will determine what happens to your estate assets. This means that only close family members will inherit from your estate. Specific gifts you promised to people will not be honored. In fact, your estate assets – including family heirlooms and special items – may need to be sold to create the required division of assets according to the intestate succession laws. By creating an estate plan both you and your loved ones are able to know exactly what will happen to all of your estate assets when you are gone.
- Protecting assets now and in the future. In order for your assets to help your loved ones when you are gone, or if you become incapacitated, those assets must be protected so they are available when the time comes. Inheritance planning allows you to do just that. For example, assets can be placed in a trust where they are out of the reach of creditors now and available to be distributed in installments to the beneficiaries at a later date, thereby protecting the assets now and avoiding the inherent risks of giving a young beneficiary a lump sum inheritance down the road.
If you have additional questions or concerns regarding inheritance planning, contact the experienced Massachusetts estate planning attorneys at Debruyckere Law Offices by calling (603) 894-4141 or (978) 969-0331 to schedule an appointment.