You have finally purchased your dream home and you can’t wait to move in and make it your own. Before you can get used to your new home, you have a long list of tasks that you must complete. Typically, homeowners unpack, purchase their furniture, and decide where their furniture will go. One item that needs to be on this list is to have an advanced estate plan in place. The wealthy and old are not the only ones who should have an estate plan. An Estate plan provides a slew of benefits that you will want to be aware of.
Provide Your Loved Ones Financial Security Down the Road
An estate plan may seem unnecessary, but it can provide a safety net for your family if you end up passing away. Without an estate plan to keep your assets safe, your family may have to fight for years to acquire your former assets. Homes are subject to automatic estate tax liens when the owner dies. Without a proper estate plan, your home will go into the intestacy process. Estate plans provide security for your immediate family and will let you choose which of your assets will go to certain family members.
An Estate Plan Will Reduce the Expenses That Will Count Against Your Estate
If you pass away without an estate plan in place, the courts handle the transfer of all probate property under probate law. This includes property distribution, business dissolution, and child guardianship. The probate process, particularly if you have to go to a probate court in Massachusetts, can be expensive. The American Association of Retired Persons estimates that 7-10% of the value of an estate can be lost through when Massachusetts probates a will. A plan that includes a trust with your property can minimize transfer fees and allow for a smoother transition of assets.
Keep Your Children Away from Protective Services
The courts can once again come into play if your children are minors when you pass without an estate plan. You need to make it clear which relatives will be the legal guardians of your children when you pass. An estate plan can accomplish this and will prevent your children from being turned over to the state. Furthermore, if your child has a disability, it is crucial that you create a special trust for that child to cover their medical expenses in the event of your death.
Make Sure You Have Adequate Life Insurance Coverage
You need to make sure that you have adequate life insurance coverage in addition to your estate plan. If you are the breadwinner of the family and you pass unexpectedly, your family may not be able to live comfortably in your home. They also may not have the financial capacity to pay the mortgage on your home. Life insurance will eliminate this problem if your life insurance policy covers the entire mortgage.
A proper estate plan can also help protect your life insurance payout. If you establish an irrevocable life insurance trust, you can avoid incurring an estate tax on your life insurance payout.
Settle into Your New Home with Peace of Mind
Those who are about to sell their business, their home, or who want to have control over their assets need an estate plan to avoid any reduction in the value of their estate. If you plan effectively for the future, your family will be taken care of in the immediate future.