Most people often associate estate planning with wealthy individuals. However, it is important to note that the amount of wealth shouldn’t be a factor in determining the need for estate planning. Making plans to ensure the smooth distribution of your assets is an essential step toward securing a stress-free future for your beneficiaries.
Although it is something that is rarely talked about, death is inevitable. The only way to secure your family’s future is to ensure your properties and assets go to the right people when you are no longer around. That is possible through estate planning.
But what exactly is estate planning?
In the most basic definition, estate planning refers to the assigning of your assets to individuals whom you want to inherit in the event of your incapacitation or death. Although it may not be as fun as choosing a restaurant for your dinner date or booking your next trip, estate planning is an essential step that determines who gets all that you have worked so hard for in life. Besides that, it helps enhance your financial management strategies.
Minimise Estate Expenses
If you neglect estate planning while you are still around, your family might lose a lot of money in lawyer’s fees and court costs when you are gone. That’s because the courts will step in to handle the distribution of your wealth if you die without an estate plan. While they might not be as costly, these unnecessary costs can significantly diminish the size of your estate.
Besides the legal fees, the lack of an estate plan can result in big tax bites for your heirs. The primary reason for estate planning is ensuring your loved ones are protected when you are no longer around. So, leaving them with a considerable tax burden isn’t precisely safeguarding them.
When estate planning, it is essential to hire an estate planning attorney, Hunter Sargent. These experts understand the ins and outs of estate planning, which puts them in a better position to transfer your funds with a keen eye toward ensuring the smallest tax burden on your heirs. So, take care of the estate planning yourself and get a lawyer by your side to protect your beneficiaries from spending a considerable part of their inheritance on legal fees.
Ensure a Stress-Free Retirement
When estate planning, most individuals assume they are doing so to create a stress-free inheritance process for their loved ones. But did you know estate planning enhances your own life when you finally retire?
Retirement might seem like a distant future, but it is coming and often finds you inadequately prepared. Estate planning essentially involves sorting out your finances. While that benefits your family, it allows you to take advantage of the government programs available for older adults on retirement.
Besides these programs, estate planning ensures you enjoy peace of mind while in retirement. As a parent, it can be relatively challenging to feel calm when uncertain about your kid’s future. But with estate planning, you will achieve increased peace of mind since it ensures you have taken care of your loved ones by preparing them for their future.
Plan for Individuals Needs
Besides ensuring a stress-free retirement, estate planning can help you protect your personal needs in the event you become incapacitated and unable to make decisions on your own. Young age and good health should not deter you from making important decisions that could be very useful in cases of sudden sicknesses or accidents.
While estate planning, ensure you calculate an estimated amount of cash you might need in the uncertain future. Focus on getting an insurance cover that would help take care of you when you can no longer do it yourself. Finally, consider choosing a designated healthcare proxy who will make all the financial and medical decisions on your behalf whenever necessary.
It can be relatively tricky to discuss the topics with your loved ones. However, involving them in these decisions is essential since it can help ensure your wishes are honored when you can no longer speak for yourself.
Protect Your Wealth
One of the primary reasons we implement any financial management strategy is to prevent property loss. Estate planning works well with your financial management strategies to protect you from losing wealth. Here is how.
Wealthy individuals face a lot of challenges in line with their assets. As your wealth grows, you become more and more susceptible to petty lawsuits designed to capitalize on your hard-earned money. One of the ways estate planning can protect you from falling victim to these lawsuits is by removing your name from the assets and transferring ownerships to trusts and liability entities, among other legally-protected structures.
Apart from listing your properties under legally-protected entities, estate planning allows you to acquire insurance covers that can provide funds to grow your wealth. Such types of insurance covers can also be essential in protecting you and your property from any possible lawsuits that can be costly to fight.
Minimise Disagreements
In the modern world, inheritance is one of the primary sources of disagreements between family members. It is common to hear of family messes stemming from splitting wealth left by a dead relative. You can avoid these issues by distributing your wealth while you still can.
At a glance, minimising disagreements between family members doesn’t directly relate to managing your finances in the future. However, most inheritance squabbles get ugly and end up in court. That translates to costly legal fees used to pay attorneys as siblings pit against each other. With a practical estate planning checklist, you can stop the fighting before it starts, preventing the wastage of your hard-earned property.
Final Thoughts
Thinking about a time when you will no longer be in the world can be a terrifying prospect for most people. However, it is inevitable, and all we can do is make arrangements to ensure our loved ones are in safe hands in our absence.
Estate planning ensures your wealth is fairly distributed among your beneficiaries in the event of your death. Ensure you hire an attorney to help streamline the estate planning process.
Disclaimer: MoneyMagpie is not a licensed financial advisor and therefore information found here including opinions, commentary, suggestions or strategies are for informational, entertainment or educational purposes only. This should not be considered as financial advice. Anyone thinking of investing should conduct their own due diligence.
