Estate planning is something that we all know we should do, but it is a task that is easy to set aside and push to the bottom of the to-do list as part of life’s ever-growing responsibilities. If you need a little motivation to begin the estate planning process, or need a reminder to review your current estate plan to determine if changes are needed, look no further. Here are 10 reasons why estate planning should be a top priority:
1. Maintaining Control
One of the main reasons, if not the main reason, to make your estate plan a priority now is because you can. While you are alive and have capacity, you can make a solid plan to establish your wishes so that they are carried out in the future. Documents like a trust, will, power of attorney, and advance health care directive are important to provide guidance to your agents so that your wishes are fulfilled when you are not able to manage your finances or health care decisions yourself. The bottom line is that by the time you really need estate planning, it is often too late. The best time to take care of your estate plan is now.
2. Maintaining Privacy
Privacy, even after death, is a top priority for many. If you have a will, your estate will likely go through a probate court process where information about your assets, beneficiaries, and transactions may be available to the public. In contrast, if you have a trust and your assets are owned by your trust, your estate may not have to go through this public court process, and your information will remain private. Even if you have a trust, it is important to ensure that your property is appropriately titled so that the probate process can be avoided.
3. Peace of Mind
Health is wealth, especially mental health. Without a solid estate plan, many worry about what will happen to their assets after they pass, and importantly, if their loved ones will be cared for. Once a comprehensive estate plan is established, almost all of our clients share that a weight is lifted off their shoulders, and that they are comforted knowing that there is a plan in place, even for the worst-case scenarios. This intangible benefit of calm and comfort can also extend to a client’s family as well. For many of our clients’ children, the knowledge that their parents have their affairs in order (even if they do not know the specifics), helps put them at ease and can help to avoid any potential future disputes.
4. Your Children Are Depending on You
Having children can change your life in many ways. Minor children and children with special needs are especially reliant on their parents to provide for their care, manage assets to provide for their needs, and make decisions in their best interest. Estate plans can be designed and tailored to address your specific situation, and importantly allow you to designate trusted individuals to act as agents in your place and care for your children if you are unable. It is imperative to designate these agents in your estate planning documents so that a court appointment of an agent can be avoided.
5. Protecting Your Beneficiaries
In addition to designating the beneficiaries of your assets, estate planning allows you to plan ahead to protect your beneficiaries (even adult beneficiaries) from challenging circumstances. In some instances, you can protect your beneficiaries from bad decisions, improper outside influences, creditors, or even their own spouse and family members. For example, instead of giving an asset outright to a beneficiary at your passing, you could instead choose to hold that asset in further trust to be managed by a trustee for the benefit of such beneficiary, with distributions made to the beneficiary upon the satisfaction of certain requirements, such as attaining a certain age or being chemically clean and gainfully occupied.
6. Addressing Change
The recent pandemic taught us that nothing should be taken for granted and sometimes, in an instant, everything can change. An estate plan should be revisited and maintained over time to reflect current and changed circumstances. Significant life events can serve as a beacon or reminder to review an estate plan to ensure that it accurately reflects your wishes. For example, a marriage or divorce, the birth of a child or the maturation of a minor child into adulthood, or a death, may signal that a review of an estate plan is needed.
7. Doing Good in Our Community
Our community has experienced multiple events in recent years, many unprecedented, which have greatly impacted people in Hawai’i and beyond. In addition to providing for family members and loved ones, clients often have a philanthropic desire to give back to our community to leave it better for generations to come. A thoughtfully executed estate plan is a wonderful way for you to leave a legacy while supporting non-profit organizations and foundations, and may also result in potential estate tax benefits.
8. Taking Care of Your Pets!
Did you know that Hawai’i law recognizes pet trusts? A pet trust is a trust that is specifically designed to benefit and provide care for your pet. A beloved pet is an integral part of a family, and your estate plan can be tailored to ensure that your pet (and any caregivers for your pet) are cared for throughout a pet’s lifetime. If this is a priority for you, once your estate plan is in place, you can rest easy knowing that your pet will be in good hands.
9. Setting Up Your Business for Success
The Hawai‘i business community is unique and often family-driven, and if you have a successful business, it is very likely that you have worked incredibly hard to achieve that. Business succession planning is often overlooked and making sure that a succession plan is in place that aligns with your estate plan is essential. The right estate planning will ensure that the treatment of your business at either your incapacity or death is handled properly and seamlessly so that your business will be able to continue to prosper.
Minimize Estate Taxes
No one wants to pay taxes, especially taxes due at death, and the desire to minimize a tax burden can be an important reason to establish an estate plan. The current Hawai‘i estate tax threshold is $5.49 million per individual, and the federal estate tax threshold is $13.61 million per individual. The current federal estate tax exemption amount is currently set to sunset at the end of 2025, at which time the threshold will be reduced to an estimated $7 million. While it is possible that the federal estate tax laws may be modified, the currently anticipated change may affect your estate and gifting plans, and it may be a good time to review your estate planning documents to determine if any revisions are needed.
