Why Estate Planning Is Essential for Securing Your Legacy
Estate planning might seem daunting, but it’s a crucial step to ensure that your assets are distributed according to your wishes and that your loved ones are taken care of. An updated and well-structured estate plan provides clarity, minimizes tax liabilities, and prevents family disputes. This post explores why estate planning is important and how working with a professional team can make the process smoother and more effective.
The Importance of Estate Tax Planning
One of the primary reasons for estate planning is to mitigate potential estate taxes. Without a proactive plan, your estate could be subject to hefty taxes that reduce the wealth you intended to pass on to your heirs. In 2025, the IRS will allow individuals to gift or transfer up to $13.99 million without incurring estate taxes, but any amount above that will be taxed at a rate of 40%. A well-designed estate plan helps minimize these taxes by taking advantage of available deductions, setting up trusts, and considering strategic gifting options.
“By working closely with clients, we can estimate what estate taxes may be incurred based on the value of their estate,” says Guy Hockerman, CPA, CFP®, Senior Financial Planning Manager at Commerce Trust.
The Emotional and Administrative Impact on Your Family
Estate planning isn’t just about finances—it’s also about reducing the burden on your family. When an estate plan isn’t in place, the responsibility of handling your assets falls to your loved ones, which can lead to emotional and logistical challenges. Disagreements may arise about asset distribution, especially if there’s no clear direction.
A comprehensive estate plan provides peace of mind by making sure your family knows your intentions, preventing confusion and disputes during an already difficult time. “Proactively addressing estate planning means your family can focus on what matters most, without the added stress of managing unfinished business,” says Joan Humes, CPA, Director of Tax Strategy and Planning at Commerce Trust.
Avoiding the Probate Process
Probate can be a time-consuming and costly process. This court procedure verifies that your will is legally valid and ensures your assets are distributed according to your wishes. However, a lengthy probate process can drain both time and money from your estate.
Working with an estate planning attorney and wealth management team ahead of time can help you take steps to avoid or minimize probate. “Our job is to understand your financial goals and work with your estate planning attorney to ensure your wishes are clearly communicated,” says Guy Hockerman. Proactive planning can help reduce delays and costs associated with probate, ensuring a smoother transition for your beneficiaries.
Ensuring Your Assets Are Distributed as You Wish
Dying without a will, known as dying “intestate,” means the state decides how your assets will be distributed. This can lead to unintended outcomes, with assets being passed to people you may not have intended to benefit from your estate.
A thorough estate plan allows you to dictate exactly who will inherit your property, ensuring that your assets go to the people or causes you care about most. Engaging in proactive estate planning removes the uncertainty and ensures your legacy is honored.
Adapting Your Plan to Life Changes
Life circumstances and tax laws change, and your estate plan should evolve accordingly. Even if you have a plan in place, major life events—such as marriage, divorce, the birth of children, or changes in your financial situation—may require adjustments. Keeping your estate plan up to date is essential to reflect these changes.
“We don’t view estate planning as a one-time task. It’s an ongoing process that should be reviewed regularly to account for new developments,” says Joan Humes. Regularly revisiting your plan ensures that your beneficiaries remain protected and that your estate is optimized for tax efficiency.
Conclusion
Estate planning is not only about protecting your wealth but also about securing the future of your loved ones. By planning ahead, you ensure that your assets are distributed according to your wishes, reduce the administrative burden on your family, and minimize tax liabilities. Working with a team of professionals can help you navigate the complexities and create a plan that adapts as your life and the laws change.
