January 02, 2025

With the federal estate tax exemption at $13,990,000 (or $27,980,000 per married couple) for 2025, together with the fact that many states (including Alabama) do not impose an estate tax, many people might assume that estate planning is not a concern. However, even without an estate tax problem, there are many other important issues that can only be addressed through proper estate planning. A well-crafted estate plan goes beyond tax considerations to protect your assets, maintain your privacy, ensure your wishes are honored, and provide guidance for your care and the care of your loved ones. Below are ten compelling (non-tax) reasons to create an estate plan:

1. Maintaining Privacy and Avoiding Probate

An estate plan can streamline or bypass the probate process, which is often lengthy, costly, and public. Probate can take a year or longer, with all associated records accessible to the public. Proper planning ensures your estate remains private and reduces the burden of probate on your beneficiaries.

2. Protecting Minor Children

Through a well-drafted will, you can nominate a guardian for your minor children, ensuring they are cared for by someone you trust if both parents pass away. Without a will, the Probate Court will make this decision. Additionally, a trust can safeguard assets for your children, preventing them from receiving their inheritance outright at age 18.

3. Providing for Your Spouse and Beneficiaries

An estate plan enables you to specify how your assets will be distributed, ensuring your spouse, children, or other loved ones are cared for as you intend. Without a plan, state statutes dictate who inherits your estate, which may not align with your wishes.

4. Addressing Blended Families

Estate planning is essential for blended families to ensure an equitable distribution of assets. For example, trusts can protect a parent’s children from being unintentionally excluded by a surviving stepparent or safeguard assets in case of remarriage.

5. Special Needs Planning

For beneficiaries with special needs, a special needs trust ensures they remain eligible for public assistance programs while still benefiting from your estate.

6. Protecting Assets from Creditors

By leaving a child’s inheritance in trust, you can shield it from creditors, including divorcing spouses, ensuring the assets remain available for your child’s or grandchildren’s benefit.

7. Providing for Pets

Your estate plan can include provisions for the care of your pets, such as setting up a pet trust to cover their expenses and designate caregivers.

8. Planning for Incapacity

Documents like a durable power of attorney, health care proxy and living will allow you to designate individuals to manage your finances, assets, and health care decisions if you become incapacitated. A revocable trust can ensure your assets are managed according to your wishes, even if you can no longer serve as trustee.

9. Charitable Giving

If you wish to support charitable causes, your estate plan can include philanthropic goals by naming charities as beneficiaries in your will, trust, or retirement accounts.

10. Business Succession Planning

For family business owners, estate planning can include a succession plan or buy-sell agreement to ensure a smooth transition of ownership and assets to family members, addressing key issues like the retirement or death of a partner.

Creating an estate plan is about more than taxes – it is about control, protection and peace of mind. A tailored estate plan can meet your unique needs, ensure compliance with state laws, and secure your family’s future. Don’t leave these critical decisions to chance; start planning today.