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Three big reasons to begin estate planning once you hit your 40s

| Aug 20, 2020 | Firm News

be married with children and they may have a house, retirement accounts and other valuable assets. This makes middle age the perfect time for a person in the North Port area to consider estate planning. The following are some reasons why estate planning is so important.

Estate planning lets you make the decisions, not the court

If you die without executing a will or trust, during the probate process the court will follow certain laws called “intestate succession” that determine who is to inherit your estate. These heirs may not be who you would have preferred to inherit your assets, and it could even lead to a preferred heir being left with nothing at all from your estate. A will or trust can let you — not the court — decide who is to inherit your assets. In addition, it is possible to customize a will or trust to reflect your wishes on when and how your heirs will inherit.

Estate planning can minimize taxes

Certain retirement accounts can come with a big tax bill upon your death if not addressed in an estate plan. For example, if you have a traditional IRA, your heirs will have to pay income tax on funds received from the account they inherit upon your death. However, if your retirement funds are placed in a Roth IRA, withdrawals made upon your death will not be taxed. In addition, if you have a large estate in excess of $11.4 million, your estate may be subjected to the federal estate tax. The right estate planning documents, such as certain trusts, can help reduce estate taxes.

Estate planning can name a guardian for your children

If you have minor children, you may likely have a desire about who should raise your child if you and the child’s other parent both pass away before your child is grown. Through estate planning, you can name a guardian to fulfill this role. While this can be a difficult topic to discuss, with a guardian named in an estate plan, relatives will not resort to fights over who should care for your children in the event of your untimely death.

Estate planning can be an uncomfortable topic to discuss, but it is an essential conversation to have especially once you reach middle age. With the right documents in place, you can ensure your assets will go to your desired heirs, reduce the tax bill that follows your death and name a guardian of your children. Without an estate plan in place, strict intestacy laws could disregard family relationships that are important to you. Taking the time to talk to an estate planning attorney in the North Port area is the first step to take once you decide the time is right to execute an estate plan that ensures your wishes are met.