Five Reasons to Have an Estate Strategy in Place
Creating an estate plan is not just about dividing assets. It is about protecting your wishes, easing the burden on loved ones, and preparing for both expected and unexpected events. These five key areas highlight why every individual and family should have a clear estate strategy.
1. Avoiding probate
Probate is the court-supervised process that settles a person’s financial and legal affairs after death. It can be lengthy, expensive, and emotionally draining. While no estate strategy can eliminate probate entirely, having a well-crafted plan can reduce how much of your estate is affected. Tools like wills and trusts can streamline asset transfer and reduce delays.
Assets that typically avoid probate include:
Property held in a trust
Property given away before death
Jointly owned assets that are not considered common property
Accounts with designated pay-on-death beneficiaries
Proceeds from life insurance policies
Retirement accounts with named beneficiaries
2. Establishing a will
A will outlines your preferences for how your estate should be managed and who should make decisions if you are no longer able to. While it does not take effect until after death, it plays a crucial role in planning ahead. Many people delay this step, but failing to create a will can lead to uncertainty and conflict. Procrastination remains the number one reason people never complete this important document.
3. Planning for estate tax exemptions
In 2024, the federal estate and gift tax exemption is thirteen point six one million dollars. This means the vast majority of estates will not owe federal estate tax. In fact, fewer than one out of every one thousand estates are expected to exceed this threshold. For high-net-worth families, strategies can be used to take full advantage of this exemption and transfer assets efficiently.
4. Using living trusts
Living trusts allow you to place assets under your control during your lifetime and direct how they will be distributed after death. Assets in a trust can pass directly to beneficiaries without going through probate. These trusts are managed by a trustee, often the individual who created the trust, and provide more flexibility and privacy than a will alone.
5. Naming a power of attorney
A power of attorney is a document that authorizes someone to make decisions on your behalf. This can apply to financial, legal, or medical matters. Choosing a person who is responsible and understands your preferences is essential. Many people choose a spouse or adult child. A durable power of attorney remains valid even if you become incapacitated, making it a cornerstone of any estate plan.
Final thoughts
An estate strategy is not only for the wealthy. It is for anyone who wants to protect their family, reduce legal complications, and have control over how their legacy is handled. With the right guidance, building your plan can be straightforward and deeply rewarding.
