Do you know the facts: 5 Reasons NOT to Neglect Estate Planning

Estate planning is not reserved for the ultra wealthy. So are you ignoring your estate planning? Let me encourage you to avoid that mistake. I'm going to share six critical reasons why you should never neglect estate planning, so stay tuned.

Welcome to another edition of We're Talking Money. I'm Phil Clark, wealth advisor and founder of OmniStar Financial Group, and today I'm sharing some relevant tips following a recent workshop that I did for a large real estate firm with more than 400 agents. Now, many of them were making these very mistakes, which prompted this video.

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Reason number one: protecting your loved ones. It doesn't get any simpler than this. After all, that is the essence of estate planning. Ensuring your assets are distributed according to your wishes can provide great peace of mind to you and to those you love. Failing to take steps that can leave your family in a better position actually leaves them with unnecessary conflicts and maybe even legal battles.

Reason number two: minimizing taxes. Now, everybody likes to save taxes, and I'm not saying that your estate will face taxes, but proper estate planning can reduce the burden of high taxes on your loved ones. The toolbox for estate planning is packed with legalese that just might save your loved ones the high cost of taxes on income with respect to decedent assets. And if your estate is large enough, estate tax savings is worth every penny.

Reason number three: ensuring care for your children. Now, I speak, of course, about guardianship. Now, I would imagine that you have given some thought about who will take care of your children in the event that you become incapacitated or, worse, die. However, if it is not in writing, there's no guarantee that your wishes will be carried out in a court of law. But you can establish guardianship in your estate plan. This simple move can ensure that your children will be raised by someone you trust in the event of your untimely passing. Your children represent one of, if not the greatest and proudest accomplishment of your life.

Reason number four: planning for incapacity. No one wants to plan for incapacity, but life is not always predictable, and mishaps, they tend to happen at the worst possible time. I'm here to tell you, good estate planning can eliminate the worry of the what-ifs. Should you become incapacitated, simply designate someone to make medical and financial decisions on your behalf. In other words, you need a power of attorney. Don't let others decide your fate. Take action. Get the right power of attorney, whether medical or durable or a financial or whatever it may be, or a combination. Get the right documents and you'll be glad that you did.

Reason number five: leaving a legacy. Almost everyone that I talk to wants to leave something behind. They want to leave it to their children, maybe to charities. Whatever the case, leaving a legacy can be a very important part of estate planning. Leaving a legacy may never happen if you don't have an estate plan. Your estate plan provides many options for supporting your favorite causes, such as charities or even the creation of a family foundation.

And with a family foundation, it's a great opportunity to teach philanthropy. It's a great opportunity to give back during your life, and an opportunity to prepare your children for inheritance instead of only being focused on preparing the money. Everyone spends lots of time preparing the money, building the wealth, getting the money ready to transfer efficiently, but they rarely spend much time on preparing the next generation, the ones that will be inheriting the wealth. Creating a legacy that reflects your values can make a difference to charitable organizations and your children.

Now, we're going to finish with reason number six: leaving assets behind. Whether you're doing this for charitable organizations, your kids, or a combination, it's likely that a living trust or a revocable trust will be part of your framework. One of the more popular versions in recent years of this revocable trust is one that funds on death or at death. However, most of the time these documents are used to avoid probate, at least that is the intended purpose, and to maintain privacy, which ultimately simplifies the distribution of your assets.

Unfortunately, when a trust is funded upon the grantor's death, the assets move into the trust just as you wanted them to, but they do it through the use of something called a pour-over will. Unfortunately, this means privacy is lost and all assets must go through probate, since they had to go through a will to make it to the trust. Be sure you don't make this mistake. When the trust is drafted, take the time to let your attorney know that building this plan to avoid probate and maintain privacy is something you don't want to lose. Take the time and put in the effort to transfer assets to the trust. When the assets are transferred to the trust, the need for pour-over wills goes away. You avoid probate and you maintain your privacy.

So there you have it, six reasons to get your estate planning in order. Now you know what neglecting your estate planning can mean for your loved ones: unnecessary risk, exposure to potentially unnecessary taxes, and making your estate a public matter. Go ahead and take action today to protect what matters most. I hope this video has inspired you to take action and complete or update your estate planning. Thank you for watching. Please consider subscribing to our channel if you found this valuable. I'll see you next time on We're Talking Money.

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