According to a 2020 estate planning survey, only 32% of 2400 people actually have a will. Of those who do not, around 30% claim it is because they do not have enough assets. This is a common misconception when it comes to estate planning—only the wealthy need an estate plan. However, without one, the estate, no matter the size, ends up going through probate and can end up costing beneficiaries a hefty bill. Unfortunately, estate and income tax bills may fall on the beneficiary’s shoulders.
Estate planning is more than having a will
While drawing up a will is one aspect of estate planning, it should not be the only step. Some may choose to set up a trust if they are worried that their beneficiary will not handle money wisely. However, it is important to understand the differences between various trusts and how it will affect their income immediately. For example, when money is put in an irrevocable trust it no longer belongs to the grantor. On the other hand, it is no longer subject to various taxes.
Additionally, people should check who their beneficiaries are. Not all assets go through a will. Life insurance policies and retirement funds let people name their own beneficiaries. Without a name, it goes through probate. Similarly, if not updated, that particular asset may go to an ex-spouse or an estranged relative.
Getting help with an estate plan
Timely estate planning can save a lot of headache, confusion and family disputes in the long run. Estate planning can be complex, but with the right guidance, Alabama residents can ensure their assets and property go where they want it to go.