How Important Is Estate Planning?

How Important Is Estate Planning?

The short answer? Extremely! It is much easier to plan ahead of time for an uncertain future outside the chaos that can surround a medical emergency or unexpected, life-altering event.

So what is estate planning anyway?

An “estate” is essentially everything a person owns—home, bank accounts, investments, life insurance, personal possessions, vehicles, other real estate, etc. Estate planning is creating a plan for how those assets will be distributed after passing on. In other words, it is advanced preparation to not only protect assets and investments, but also to ensure that loved ones are still taken care of in the event of death.

Planning ahead for a trip to the grocery store or making a schedule for weekend activities makes those events less stressful. The same can be said for estate planning. It can create peace of mind knowing that long-lasting financial obligations will not have adverse impacts.

Below are some key reasons why planning for the future is necessary¹:

1. Avoids having the courts assign unintentional heirs
2. Provides family protection, especially for those with young children, such as guardianship designation for minors
3. Greatly reduces beneficiaries’ tax liabilities
4. Prevents clashes within the family and ensures that intentions are honored

¹Do You Need An Estate Plan?, Fidelity Investments