Yes, everyone needs an estate plan, regardless of whether that plan is centered around a will or a trust. These important tools ensure that your legacy will be carried out according to your wishes. They will allow you to provide for loved ones after your passing. A properly prepared trust can also help avoid probate, which can be a lengthy, public, and often expensive court process that becomes necessary when there is no legally valid estate plan in place for distributing your accounts and property after your death. You may think only the lavishly wealthy need a trust, but wills and trusts benefit everyone. They help protect loved ones, avoid legal issues, and ensure your wishes are clearly carried out. Even if your savings are modest or your property has mostly sentimental value, these planning tools provide peace of mind and control over what happens after you are gone.

Creating a will or a trust should be a priority for several important reasons, including the following:

Handling Digital Accounts

No matter the size of your digital footprint, nearly everyone has at least something. Consider your cloud photos, emails, social media, shopping accounts, payment platforms like PayPal or Venmo, and online banking accounts. Whom do you want to have access to them? Do you want the accounts deleted or transferred to someone else? What happens if the account holds money? How do your loved ones access that money? An estate plan ensures that your online photos, records, and accounts do not get lost or locked.

Avoiding State Recovery for Medicaid Benefits

Nursing homes can cost thousands of dollars per month. Medicaid helps cover long-term care costs for individuals who meet specific income and asset limits through a cost-sharing government program. State Medicaid agencies can legally recover care costs from specific assets or accounts you own at the time of your death. Therefor, a comprehensive estate plan may help prevent Medicaid recovery from bank accounts or, in some states, forcing sale of your home.

Reducing Income Tax Concerns with Retirement Accounts

An inherited retirement account is not always tax-free (depending on the type of account). Even without estate tax, beneficiaries may owe income tax depending on what they receive and their current income tax bracket. Ensuring your estate plan addressed your retirement accounts and their distribution can protect your savings and potentially reduce your beneficiaries’ income tax burden upon inheritance.

Maintaining Control of Your Legacy and Protecting Beneficiaries

Estate planning can help ensure that your money and property are distributed in accordance with your wishes after your death. For example, if you want to provide not only for your surviving spouse but also for your children from a prior relationship, your estate plan can help you do that. It protects beneficiaries’ inheritances from divorcing spouses, creditors, lawsuits, and financial predators who might otherwise claim or misuse the assets. A plan helps prevent your money and property from being lost to beneficiaries’ mismanagement or overspending, which happens surprisingly often. In fact, studies show that 70 percent of family wealth is depleted within the two following generations and 90 percent within three generations.^[1] With thoughtful planning, you can avoid becoming part of that statistic.

An estate plan can also help ensure that your values are passed on to the next generation and that your wishes are legally documented in a way that everyone understands. Discussing your wishes with your loved ones will not make your plan for the future legally enforceable. To ensure your goals are met, work with an experienced estate planning attorney to create a will or trust. Do not put off this important step. Taking the time to plan will save your loved ones stress, money, and heartache in the future. It is truly a gift to them.

We’re Here to Help

You work every day to build a wonderful life for you and your family. We work every day to help you design a unique plan to ensure your spouse, and your family will be taken care of now, and upon your passing. Nielson Law PLLC Provides family-focused estate and business planning to individuals and families in Austin, Round Rock, Cedar Park, and the Central Texas area. For more information, and to learn about our firm, please contact us.