Estate planning refers to the distribution of your pension, assets, and wealth to your heirs when you pass away. It helps prevent family conflicts by resolving finance matters ahead while you still can. Through estate planning, you can draw a blueprint on how your wealth will be distributed to safeguard your family’s future.
Here are the things you need to know about estate planning:
Estate Planning Is Not Just for the Rich
Many people think that creating an estate plan is expensive and requires too much time. In reality, estate planning is not time consuming and significantly less costly than what your family needs to pay for taxes and resolving your estate without proper planning. Consult a trusted and reputable estate planner, such as Brian Douglas, for more information about the cost of an estate plan.
Estate Planning – the Earlier the Better
Creating an estate plan should be done as soon as possible, even if you’re still young, active, healthy, and strong, as nobody knows when a person will die. To secure the future of your children, you need to draft your estate plan as soon as possible.
Here are the benefits of creating an estate plan early:
- You’ll ensure that your properties, money, and other assets will go to the right people, like your children, spouse, relatives, trusts beneficiaries, and charities. Without an estate plan, the court will decide the distribution of your wealth based on state laws or what is called “intestacy laws.”
- Estate planning minimizes estate taxes owed to the state and federal governments.
- Estate planning avoids delay and cost of probate by titling properties jointly or using living trusts.
- You can make provisions for your children’s guardianship. Appoint a person you can trust to take good care of your children while they’re still young, which is helpful if you’re a single parent.
- You have full control of your assets while you’re still alive.
- You can manage trust trustees if you have special children through an estate plan.
- You can designate a trusted person who will be in charge of your estate.
Estate Planning Protects Your Children Through Trusts
Proper estate planning protects your children from lawsuits and creditors in the event of death. If your property is inherited by your children via intestacy laws, it’ll be highly vulnerable to creditors because it’s treated as your children’s other property and earnings. The property can be lost to lawsuits and creditors. That’s why it’s important to leave your assets to your children in the form of a trust to ensure your children’s future.
A trust legally protects your assets, businesses, and investments. Estate planning facilitates the transfer of assets to your heirs or trustees, reducing tax liability and protecting properties from bankruptcy and lawsuits.
Here are the types of trusts:
- Revocable Trusts: The trustor or you maintain the control and legal ownership of your assets, so you’re responsible for paying estate taxes.
- Irrevocable Trusts: The trustor or you transfer the legal ownership of your assets to your trustees, which lowers the taxable portion of the estate. When mending a trust agreement, the trustor relinquishes certain rights. It means that you can’t change your beneficiaries if they’ve been established.
Living Trusts Can Be Transferred Anytime
While you can create trust anytime, you can also transfer living trusts during your lifetime. You can open accounts in trusts with banks to help fund your children’s college education. Your children can’t spend the income from the trust fund or won’t have complete access to the funds until they reach a certain age but can manage the assets to fund their college expenses.
Here are the benefits of estate planning to your children:
- Avoid your children from overspending or developing bad habits by appointing a trusted person to make decisions while they’re still young.
- Estate planning protects your children from losing their inheritance because of poor decision making.
Estate Planning Helps You Give More to Charity
You probably have a big heart for charitable institutions and you can to help by giving an amount of money when you pass away, as a way of giving back to your community and the people who inspire you. If you want that a part of your wealth will go to your favorite charity, you can give generously through estate planning. Intestacy laws don’t have a room for dividing assets to charitable contributions, so you have to create an estate plan.
Estate planning saves you and your loved ones from the stress and hassle of managing assets. You’ll have a peace of mind that you secure your family’s future according to your preference, and estate planning reduces or eliminates doubts, questions, and conflicts. Also, it fosters a healthier and happier family relationship because everything is set and taken care of.