Apart from planning the fate of your assets after your demise, estate planning was also oriented towards saving your assets from the federal and state estate taxes. However, courtesy to the new estate-tax exemption, one can be exempted up to $5.1 million and the federal exemption is $11.2 million as on January 1, 2020, which means that a very small percentage of less than 1% of the US families will have to pay tax for their estate. Hence, only the estate planning for ultra-wealthy families focuses on tax reduction, for the rest, it is about much more. Thus, we can say that estate planning is dead as it is not anymore about planning for death and it is also about planning for your life.
Estate Planning is dead?
Traditional estate planning is dead as it is not meant for your happiness or help to live a satisfying life. However, the basic value of estate planning is still the same i.e. to help people ensure that their wealth will be dispensed to their family in their own chosen way, to appoint a guardian for the minor children or specially-abled people and thus ease the burden and stress of the family. Planning for the unexpected situation, for the life you want to live and your control over your property are also required to sustain a happy and fulfilled life. Hence, we can say that estate planning is not dead.
An estate plan should deal with several issues that can have a lifetime impact on coming generations and their income taxes and charitableness, as well as the development of their value systems and personal sense of accomplishment. Estate planning is essentially the implementation of a strategic family plan that continues after death. Below mentioned are a few issues that are addressed by the estate plan and its benefits:
Goals:
You must start with figuring out your goals to be accomplished with respect to your wealth left at the time of your demise including catering your goals with respect to charity, family or both. You must strategize the division of your wealth between your family and the organization you support so that your wishes will be fulfilled and your family will not face any conflict.
Method to dispense wealth:
It’s completely your choice to opt for the best method to protect assets from predators and pass it on to your heirs safely the way you want. You can opt for dispensing your assets either through a will or a trust. If you have a minor child or specially-abled family member, a trust will be a good option as it will take care of your assets while providing monthly funds for him/her. The funds are not subject to creditors and avoid probate too.
Requirements of beneficiary:
If you think that all your money should be transferred to your beneficiary or should be transferred according to some set goals such as education, business or health needs. You can choose it over the provision if the beneficiary needs special care due to some disability or is a minor child and if he/she is spendthrift or not responsible enough. In such cases, a trust is preferred over a will.
Charitable goals:
Incorporating charitable goals in your estate planning lets you pass on selflessness and social empathy as well as resources to the next generation. It might be the case that the next generation forgets or is not interested in charity and your desire is to support an organization, in such a situation you can plan your estate properly by taking care of this point.
Business Continuity:
Business succession or continuity can be dealt with estate planning. According to your experience, knowledge, and choice, you can decide who will be your business heirs while assuring you that your wealth and cash flow will be maximized.
Planning for incapacity:
Apart from planning after death, planning for your life is also very essential. You must have your attorney for your financial and healthcare affairs for the unexpected situation of being incapacitated due to severe illness or an accident. Also, you should have your plan for medical decisions to be taken for you in case of a dire medical situation.
Hence, estate planning is not only about avoiding the inheritance tax, but to assure you a life of your choice, control over the assets and ease for your family after your death. By all the aforementioned reasons, we can say that estate planning is not dead but has changed strategically from focusing on the estate tax to achieving family objectives and desires and will indeed live on.
