There is an unfortunate myth about estate planning: It is only appropriate for seniors or the elderly. While estate planning is unquestionably important for this age group, the truth is that all of us need to plan our estates and get our affairs in order regardless of how young or healthy we are. There are many reasons for this. Furthermore, some states, such as California, have their own tax laws that are vital to understand.
An unfortunate truth: You could die young
None of us like to think about the possibility of dying young, but the ugly and unfortunate truth is that it could happen to any of us. Consider the following facts.
- Life expectancy is shrinking in the United States, largely as a result of a rise in drug overdoses, suicides and other illnesses.
- Tens of thousands of Americans die every year with the deaths occurring as a result of accidents, violence or an unexpected illness.
Significant tax advantages
A little-discussed advantage of taking the appropriate estate planning measures is that there are major tax advantages to doing so. Even if you are young, or relatively young, you can begin the process of setting up trusts to minimize your tax burden. Some states, such as California, do not have estate taxes, but there are still major federal taxes you could incur. These taxes will grow if you do not structure your estate appropriately, meaning that the federal government may siphon off a significant chunk of your wealth before it goes to your family. Indeed, when done properly, estate planning can help reduce your tax burden even while you are still alive.