Why estate planning is important for adults

There are several reasons a person in Texas may need an estate plan regardless of whether the person is wealthy or not. However, people may hesitate to make one. One survey found that only 42 percent of people said they had an estate plan.

For wealthy people, an estate plan is important in avoiding taxes including gift tax, estate tax and generation-skipping transfer tax. An estate plan can also be used to establish philanthropic giving. A person might want to create a trust or a foundation to donate to charity. Limited liability entities or trusts could be set up to protect the family wealth from lawsuits. Estate planning can also be an important part of preparing children to become more comfortable with the family wealth. Parents may work with children themselves or have a financial advisor start teaching them about money.

Whatever their income level, everyone should have a will or trust that says what assets will go to which beneficiaries. Without this, state law will determine who gets a person's property. At minimum, people should keep insurance beneficiary designations updated.

Another important consideration for everyone is putting documents in place in case a person becomes incapacitated. This might include powers of attorney for financial and healthcare decision-making and insurance if the person needs long-term care.

An attorney may be able to help a person set up an estate plan based on that person's needs and individual situation. In some cases, a person may be unaware of options that are available. For example, if a person has a loved one with special needs, a trust can be set up to help support that person without interfering with the person's ability to access benefits. People with minor children can use a will to appoint a guardian so that family members do not have to go through a long court process.

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