You may be surprised to learn that you have an estate, and in fact, everyone does. Your estate is comprised of each thing that you own. So, this could be your car, your homes, your savings account and any personal possessions. No matter how big or small, everyone has an estate as well as one thing in common – you cannot take your estate with you when you die.
When you die, your estate will be given to people of your choice, in most cases, it will be divided between multiple people, and this will be written out in your will. A will is a document which ensures that your wishes are carried out. You will state whom you wish to receive what of your estate as well as when they are to receive it. You will also want to make this happen with the least amount being paid in taxes, legal fees and court costs.
Essentially, that is what estate planning is. You make a plan in advance and name who you want to receive your possessions after you pass away. Nevertheless, good estate planning takes a lot more than just that. It should also include:
- Instructions for passing on your values such as your religious beliefs, education, hard work and so on. This should be in addition to your physical valuables.
- Instructions for your care if you were to ever become disabled before you pass away.
- A name of guardian and an inheritance manager for the children who are still minors.
- Any information regarding how to provide for family members with special needs without disrupting government benefits.
- Any information regarding how to provide for loved ones who are irresponsible with money or who may need protection from creditors.
- Information about life insurance and disability income insurance (if you ever became too ill to work) to provide for your family at the wake of your death
- The transfer of your business at retirement, in the light of disability and upon your death
It should also not be a one-time event. The plan should be reviewed and updated as your situations and/ the laws develop or change over your lifetime.
Why make a plan?
If you make a plan, then you can have the peace of mind that your family will be supported after you have passed away. It is not a nice thing to think about really, but you cannot avoid death. It means that your loved ones can carry out your wishes and be protected from inheritance tax.
All in all, it will make your life and your family’s life a lot easier and far less stressful as you all know there is a systematic plan in place which, if followed correctly, should make your passing away a lot smoother financially.
It should also be mentioned that estate planning is not just for the elderly. Many plan to do it early on and make amendments as they see fit as it is appreciated that anyone could die at any point in their lives.