The studies that have probed into the subject over recent years are all in concurrence: a plurality of American adults do not have the appropriate estate planning documents in place. When you consider the fact that you plan your estate to prepare for an event that is definitely going to happen to each and every one of us, this is a very disturbing trend.
Some people fail to take action because they don’t understand why estate planning is necessary. In this post, we will look at three compelling reasons why you should put a plan in place if you have been remiss to this point.
1.) An Estate Plan Protects Your Family
Usually, when you make advance plans, you are taking action for your own benefit. On the other hand, when you plan your estate, you are devising a framework that will protect your family in the event of your passing.
Everyone knows that older people are more likely to pass away than their younger counterparts, but there are no guarantees. When you become a self-supporting adult, you assume certain adult responsibilities, especially if you have people relying on you. Estate planning should be viewed as one of these core responsibilities of adulthood.
If you fail to act, your loved ones could be left behind to deal with a very difficult situation on a financial level, and this would compound the devastating emotional loss.
2.) Planning Can Protect Your Legacy
There are taxes that can come into play when assets are changing hands after someone passes away. There is a federal estate tax that is applicable on asset transfers that exceed $5.43 million in 2015.
This is a relatively large exemption, but as a Connecticut resident, you also have to be concerned about the Connecticut state estate tax. The state-level estate tax exclusion is just $2 million, and the value of your home and your life insurance policies are part of your estate for tax purposes.
Even if you are not in this financial stratosphere, you could lose everything that you intended to leave to your loved ones paying for a nursing home at the end of your life. Medicare does not pay for long-term care, and it is very expensive.
There are asset preservation strategies that can be implemented to mitigate tax exposure, and you can also take steps to protect your assets from devastating nursing home costs. If you do nothing, a great deal could be lost.
3.) You Can Avoid a Guardianship
Many elders become unable to handle their own affairs at some point in time. The state could appoint someone to manage your affairs during a guardianship proceeding if you do nothing to prepare for incapacity, and you would become a ward of state.
You can prevent this if you embed an incapacity plan within your broader estate plan.
If you are convinced that action is required, send us a message through this page to set up a consultation: Hartford CT Estate Planning Attorneys.