McDonald Warner - Probate, Elder Law, & Special Needs

Non-tax reasons for prudent tax planning

As the federal income tax filing deadline draws near (it is April 17 this year, by the way), it is natural for people to maximize tax savings strategies in anticipation of saving money that they may owe to Uncle Sam. Some strategies revolve around estate planning, as conscientious tax payers look to add more to their trusts, make charitable donations and maximize the gifts that they may give for the particular year.

Indeed, tax planning has its place within the estate planning realm, but there are other important non-tax reasons for having such a plan. This post will explore those reasons.

Operation of law - If you pass away intestate (i.e. without a will) you lose the ability to determine how your assets will be distributed. Basically, your estate may be at the mercy of Arizona's intestate laws, which incorporate a process for distributing one's property if no valid will is in place.

Ensuring that your children are cared for - Another non-tax reason for an estate plan is to ensure that children are cared for in the event you are unable to. In the event you are unable to do so, a guardianship agreement should be a part of your plan.

Protecting beneficiaries' financial interests - It is also prudent to protect beneficiaries (particularly young adults) from themselves if they are set to inherit your business (or a large sum of money) if you pass away. A trust may be created to distribute money only at particular times, or to transfer ownership or decision-making powers to a third party.

The preceding is not legal advice. Further questions about estate planning should be directed to an experienced attorney.

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