Put your estate plan on your list of New Years resolutions.

It's that time of year when we start thinking about resolutions for the New Year. Sometimes it feels like people devote more time choosing a place to order dinner from than they do estate planning—deciding who will inherit their assets after they’re gone. It may not be as fun to think about, but without estate planning, you can’t choose who gets everything that you worked so hard for.

Estate planning isn’t only for the rich. Without a plan in place, settling your affairs after you go could have a long-lasting—and costly—impact on your loved ones, even if you don’t have a pricey home, large IRA, or valuable art to pass on. Need some reasons to add putting an estate plan in place to your list of New Years resolutions?

(1) AN ESTATE PLAN PROTECTS BENEFICIARIES. If estate planning was once considered something that only high net worth individuals needed, that’s changed. All families need to plan for when something happens to those who are earning money for the family. You don’t have to be super rich to have asset worth protecting, like a house, a retirement plan, a vacation house, a brokerage account, etc., all of which you’ll want to pass on to your heirs. Even if you’re only leaving behind a house, if you don’t decide who receives the property when you pass away you won’t have any control over what happens to it.

That’s because the main component of estate planning is designating heirs for your assets, whether it’s a vacation cabin or a stock portfolio. Without an estate plan, the courts will often decide who gets your assets, a process that can take years, rack up fees, and get ugly. After all, a court doesn’t know which sibling has been responsible and which one shouldn’t have free access to cash. Nor will the courts automatically rule that the surviving spouse gets everything.

Here's what it comes down to: If you die without a Will, which is a vital part of an estate plan, state law will decide who gets your assets, not you.

(2) AN ESTATE PLAN PROTECTS YOUR KIDS. Nobody likes to think about their own death, but if you’re the parent of small children, you need to prepare for the unthinkable. This is where the Will portion of an estate plan comes in. To ensure that your children are cared for in a manner of which you approve, you’ll want to name their guardians in the event that both parents die before the kids turn 18. Without a Will that names these guardians, the courts will step in to decide who will raise your children.

(3) AN ESTATE PLAN CAN SPARE YOUR HEIRS A BIG TAX BILL. Estate planning is all about protecting your loved ones, which means in part giving them protection from the IRS. Essential to estate planning is transferring assets to heirs with an eye toward creating the smallest possible tax burden for them.

Even just a bit of estate planning can enable couples to reduce much or even all of their federal and state estate taxes and state inheritance taxes. There are also ways to decrease the income tax beneficiaries might have to pay. Depending on your family's situation, without an estate plan, the amount that your heirs will owe the IRS could be quite a lot.

(4) AN ESTATE PLAN HELPS PREVENT FAMILY FIGHTS. We’ve all heard the horror stories. Someone with money dies and the war between family members begins. One sibling may think they deserve more than another, or one sibling may think they should be in charge of the finances even though that might not be within the sibling's particular skill set. Such squabbling can get ugly and end up in court, with family members pitted against one another.

Stopping fights before they start is yet another reason why an estate plan is necessary. This will enable you to choose who controls your finances and assets if you become mentally incapacitated or after you die and will go a long way toward quelling any family strife and ensuring that your assets are handled in the way that you intended. It also will help you make individualized plans, if necessary—to take care of a child with health problems or to set up a Trust for one who might be better off not inheriting a lump sum. It can also help you give more to the child who did most of the work of caring for you in your later years or less to the one whose extensive education you funded while paying far less for their siblings.

Deciding whether to divide your estate exactly equally is one of the key tasks you need to think through. And, of course, if you've had more than one spouse—or have children from more than one family—an estate plan is urgent.

Here's the bottom line. If you want your assets and your loved ones protected when you can no longer do it, you will need an estate plan. Without one, your heirs could face big tax burdens and the courts could designate how your assets are divided—and even who gets to raise your children. If you don't have an estate plan or you have one that needs to be reviewed and updated, give us a call at 253.858.5434. We represent clients throughout Washington and Idaho and are available to meet in person (with appropriate social distancing protocols in place), by phone, or via video conference.