First, let’s bust open two common misconceptions about Estate Planning:
One is that it concerns death. When people hear about estate planning, they usually neglect the concept as it’s mostly related to their own death or the passing of a loved one. True enough, estate planning tackles such parts, but there’s more to it than that.
Two is that estate planning is only for the wealthy and you as a regular person doesn’t need to worry about it. Yes, it is true that the rich have a lot to do with planning their estate, but you also own valuable things. Come to think of it, you have money in the bank or your home or your cars, or some other things that are of worth, right?
Planning your estate should be on the priority list because obviously, you can’t predict the future and being prepared is the only way to ensure that your most precious wealth will end up to your rightful heirs. Without it in place, there could be a long-lasting negative impact on the people you love. Of course, you won’t be able to solve it anymore.
What is Estate Planning?
It is the legal act of arranging, managing, and disposal of a person’s estate (asset) in the event of incapacity or death. Such planning includes the bestowal of assets to heirs and settlement of estate taxes. Estate plans are usually accomplished with the guidance of an estate law attorney.
Do you need an Estate Plan?
Well, you do! But if you’re still on the fence about whether or not you are willing to spend time with an estate plan, you need to understand the reasons why it’s so important for you. And here are 6 reasons why estate planning is essential.
1. Protect Young Children
No one hopes to die at a young age and nobody even thinks about that. But if you’re a parent and still have little ones to raise, then estate planning is something you really have to consider. You need to prepare for the most unlikely of events and ensure your kids future.
In order for your children to get the things you want them to have, you need to have an estate plan. If you want any say in who raises your children should you and your spouse die, then you need to have that all planned out.
Your estate plan will include what each child gets should you die and who will raise them. Ensure that you secure your children’s welfare or the court will.
2. Restrict Access to Inheritance
You may wish to leave valuable items or money to your children, but some may have a poor sense of judgment right now. If this is the case, you can choose to specify another family member (an adult maybe) as a trustee to ensure that any assets you leave your child will be used in their best interests. You wouldn’t want any of your beneficiaries to waste their money on frivolous expenditures. Also, you want to make sure that your inheritance will definitely end up with your rightful heirs.
3. Avoid a Family Feud
You have probably heard about families who wind up dueling it out over the things and money after their loved one has died. This is a very real scenario that can happen if you don’t properly plan for your death.
As part of your estate plan, you can get to every detail of how you want your inheritance to be distributed. Choose who you wish to be in charge and who gets what after you die. This helps ensure that there is little chance of an argument even over silly trivial items that aren’t specifically mentioned in your will. Sure there will be arguments after from who knows who, but legally your appointed heirs are already secured and no one can take it away from them.
4. Protection if Spouse Remarries
Proper estate planning will ensure that your assets go to your children and grandchildren rather than your spouse’s new husband or wife and new family members.
5. Spare Heirs from Excessive Estate Tax
You don’t want to leave your loved ones with an unnecessary tax burden from your estate. Give them protection from the government by planning your estate. Your goal is to achieve the smallest tax accountability for your heirs as possible because if not, federal and estate inheritance taxes would cost them a lot. Find ways to lessen the income tax your beneficiaries might have to settle.
6. Avoids Probate
Probate is a lengthy and often tedious court proceeding to rule out the authenticity of your will (if you made one). Once you were not able to settle your inheritance before you die, your estate will go to probate. Your assets will be valued against any unpaid bills and taxes, then it will be distributed to who the court deems to be your legitimate heirs. In short, with probate, no one in your closest circle has the capacity to decide but only the court alone and you don’t want to leave that burden for your loved ones. Not mentioning the additional expenses it would cost them.
Just to give you an idea, when your estate lands on probate, the court will appoint a representative or executor which is easily entitled to roughly 5 percent of your assets as an administrative fee. Then, there’s about the same percentage that will go the attorney’s fee by merely overseeing the court procedure. That’s instantly 10 percent off your inheritance by not executing an estate plan.
You just had an idea with the previous 6 reasons about how awful it can be without planning your estate. It’s a total security wrecker not only for you but also for your loved ones. While the process of planning your estate means some serious groundwork with your chosen attorney, the trade of having a peaceful mind will be your biggest benefit today and in the future. You’ll have the full confidence that your wealth will go to the people you treasure the most, your loved ones, as determined by you.
Daisy Raouph, CLU, CHS, specializes in mortgage financing solutions and financial services. A Mortgage Broker and Financial Security Advisor with over 30 years of experience in financial services. Contact us today to review your mortgage financing options. We can help!