Estate planning requires determining how you want to preserve, manage, and distribute your assets once you die or become incapacitated.
You must do it as soon as you hit legal age and update it every three to five years. If you don’t have an estate plan yet, now is the time to act. It’s crucial for ensuring the future of your family.
What Are The Importance Of Estate Planning?
If you’re not yet convinced that estate planning is a must-have, read on. We’ll talk about its benefits for your loved ones. From working moms to stay-at-home dads, every parent needs to prepare for the worst and make sure that their family does not suffer from their demise.
Protect Your Children
What will happen to your children when you die? This is especially worrisome if you’re a single dad or mom. If you’re often wondering about the answer to this question, you can eliminate doubts by setting up an estate plan.
So what is estate planning vs will? One of its most important components is the will, which will identify the assets that your family is eligible for. At the same time, you can identify who will take care of your kids.
You can nominate a guardian you trust, which is especially important if you die when your kids are too young to be by themselves. Otherwise, the court can decide on such things.
Convey Your Funeral Directives
Your estate plan does not only identify asset distribution and child custody. It can also include funeral directives. For instance, you can say whether you want to be buried or cremated. You can also say how much of your estate your family should spend on your funeral. In addition, the directive can also stipulate anything special you want them to do at your funeral.
To minimize the financial burden on your family, you may want to consider getting burial insurance. A good burial insurance guide will help you learn how you can find the right one. With the right insurance, you’ll be at peace knowing that your death won’t be an incumbrance to those you’ll leave behind.
Prepare for Your Medical Needs
One of the most common misconceptions about estate planning is it kicks in only after you die. Nonetheless, you can also have some stipulations that will apply when you cannot make important decisions, including when you’re in a life-or-death situation. The estate plan may state what you want your family to do in case you’re in end-of-life care. It can also give medical power of attorney to a designated individual who will make important decisions if you can’t do so.
Lessen Tax Liabilities
Taxes can be a financial burden to your loved ones. This is especially the case if you are leaving assets with a lot of value. As a part of estate planning, you should consider tax reduction strategies. You can plan a tax-efficient wealth transfer. Taxation laws can vary depending on your location, so make sure what would apply or not in your case.
According to the American Bar Association, probate is
“the formal legal process that gives recognition to a will and appoints the executor or personal representative who will administer the estate and distribute assets to the intended beneficiaries.”
It’s a court-administered procedure, so some people want to avoid such. If you’re one of them, estate planning can help as it provides clear guidelines on what you want to happen to your assets.
Continue Your Business
A business succession plan can work together with estate planning. It will guide your heirs on what they must do with the business you will be leaving behind. It can help ensure that your legacy lives on, especially if it’s a business you built from the ground up.
You can also use a power of attorney to designate a caretaker for the business in case you’re in a medical condition that prevents you from carrying out your usual duties. Without a plan, your business could end up in shambles, wasting all your efforts.
Donate To Charity
If you are philanthropic, estate planning can be a vehicle to continue your cause even when you die or become incapacitated. You don’t need to have millions of dollars to donate to the less fortunate. Whatever it is you wish to give to the charity you support, you can specify such in your estate plan.
Prevent Your Spouse From Getting Your Assets Upon Remarrying
Your spouse might end up remarrying once you die. You can’t blame him or her for such. However, what you can do is protect your assets, making sure they go to the people you want. It can end up in your spouse’s new family if you do not have a clear stipulation in an estate plan regarding your intended recipients.
Restrict Access to Inheritance
Estate planning is also important if you want to prevent your children from accessing your assets and leave them in a trust instead. In turn, you’ll also stipulate conditions that must be met for the kids to acquire what you left behind. For instance, such can be after reaching a certain age.
Keep Your Family Together
It might seem impossible right now, but your family can end up fighting when you die. For example, such can happen when children are dividing the assets of their deceased parents. Hence, it can affect their once harmonious relationship. A good way to prevent such is through estate planning, which will make your wishes clear through your will. It can help navigate complex dynamics in the family, making sure that death and money won’t break them.
It’s never too early to start estate planning. As soon as you reach legal age, it must be one of your priorities as it can give you and your family peace of mind. Doing so can specify how you want to distribute your assets and ensure a good family relationship even when you’re gone.
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