Easing financial worries through estate planning
A will or trust can be much more than just a means to leave wealth to younger generations
The prevailing view of estate planning is that it is a tool used by wealthy individuals and families to minimize estate taxes. It is true that certain trusts, estate reduction methods, and other legal options exist for those who are seeking to maximize the dollar amount they can leave to heirs and beneficiaries. However, estate planning is not just a means to provide more – it is also a means to ensure that what is provided goes towards the wellbeing of beneficiaries, not just the wellbeing of a bank account.
That is why estate planning is important for all families, not just those above the federal estate tax exemption of $5 million. Using money well is more important in many cases than having a lot of it – wealth can be squandered, after all. Some of the richest Americans have decided not to leave their fortunes to younger generations because of the fear of what too much money can do to the young. Texas oil baron T. Boone Pickens has long held that inherited wealth can do more harm than good, and Warren Buffet believes children should have enough wealth to do what they want, but not enough wealth that they can do nothing.
For an 18 year-old, wealth can be relative. In some cases $50,000 can cause as many problems as millions in the bank.
That is why a trust can dictate how money left to heirs can be spent. A trust may require a beneficiary to further an education to obtain funds, for example, or only be used to purchase a home. Under state law, a child can inherit money when they turn 18, which most people agree can be a difficult time to manage money responsibly. A trust, on the other hand, can allow a beneficiary to inherit wealth when they turn 25, or even 35.
While money is important, when people consider what to leave younger generations, more often than not they want to pass down values, personal experiences and contributions to society. An estate plan can take into account the values learned over a lifetime of hard work and savings and reflect those values in how an estate is distributed.
A comprehensive estate plan can benefit families in many ways
While helping loved ones financially is an invaluable part of estate planning, a comprehensive estate plan can also reduce stress and conflict in unforeseen and difficult times. A living will, for example, allows an individual to determine the type of medical care he or she wants at the end of life. This can provide peace of mind for everyone involved. A financial power of attorney entrusted to the right person can prevent financial issues before they begin. A will or trust can avoid disputes over certain property among family members. These examples are just a few reasons why an estate plan brings as many emotional as financial benefits.
New Jersey residents looking to create, modify or update their estate plan according to their needs should contact the experienced estate planning attorneys at Michael A. Manna & Associates.
Keywords: Estate planning, inheritance, financial planning, long-term care.