3 reasons everyone should have an estate plan

Estate planning can help reduce asset loss, honor a person’s end-of-life wishes and ensure that his or her heirs have adequate care and financial support.

Many Tennessee residents recognize the importance of estate planning, yet never begin or complete the process. Tellingly, CNBC reports that over half of Americans do not even leave behind a will when they pass away. Unfortunately, this lack of planning can lead to various needless legal complications and losses. The following functions of estate planning make it especially important for people in Tennessee to craft one of these plans without delay.

1. Providing for dependents

Estate planning can help a person ensure that any children or other dependents are properly cared for, according to the American Bar Association. A will and other measures, such as trusts, can help provide for heirs to receive adequate income to support their daily living costs. If a person's children are under the age of 18, a will is also needed to designate a guardian.

Estate planning is also important because it allows a person's dependents to access needed funds more quickly, as CNBC notes. Settling an estate through probate can be a lengthy process that may last for several months in Tennessee. For some families, this delay may create unnecessary financial hardship. A thorough estate plan can help heirs avoid the probate process or at least receive partial payments during it.

2. Minimizing asset loss

Estate planning can also help reduce asset loss during estate administration and during the transfer of assets to heirs. The ABA notes that all of the following factors can cause asset depletion during these processes:

  • Disputes between heirs. Prolonged disputes about how an estate should be settled may significantly reduce the assets that are left to be divided among heirs.
  • Additional estate settlement costs. Heirs may also lose out on assets if they have to hire professionals to provide assistance during the estate settlement process.
  • Taxes. Without a carefully structured estate plan in place, in some cases losses to estate taxes may be significant.

Creating an estate plan can benefit heirs financially by eliminating or at least reducing all of these sources of expense.

3. Addressing end-of-life issues

Estate planning also plays an important role in ensuring that a person's desires regarding end-of-life decisions and care are honored. For example, a living will, which is referred to as an Advance Care Plan in Tennessee, can express a person's wishes regarding medical care in the event of terminal illness or incapacitation. Creating a medical or financial power of attorney ensures that, under similar circumstances, important decisions can be made on a person's behalf by an authorized third party.

Crafting an effective plan

To maximize the benefits that estate planning can offer, people who are beginning this process should consider seeking the assistance of an attorney. An attorney can help a person review the full range of options that are available and create a comprehensive, legally enforceable plan.