What exactly is the importance of estate planning? To put it simply, it's laying out in black and white what you intend to do to your assets when you pass away. It's also to document who you intend to make financial and critical medical decisions for you when you cannot. All these wishes are put into writing on your will.
Unlike what other people might think, estate planning is not only for the rich; it's for everybody. If you want to learn more about the estate planning process, you can read about it here.
There are several different reasons to consider estate planning at the earliest possible time. When someone is interested in making sure that his financial assets are passed on to others upon his death, it's referred to as providing dependent care. A dependent is defined as any spouse, child, or parent financially reliant on the deceased person.
Are you still reluctant to organize your estate early? Here are four important reasons you should do this early as well as some tips to help you work on estate planning:
1. Protection For Your Family
One reason to consider estate planning is to protect your family against lawsuits that could occur down the road. This allows you to make sure that your death will not negatively impact them, and it gives your family the resources that they need to support themselves after your passing.
If you have children, you can also state who will be responsible for them in case of your untimely death. This is an important aspect of the will, especially if your children are still minors.
2. Avoid Probate Processes
Another reason that people organize their estates is that they can avoid probates. Probates can be costly and complicated as it involves lengthy court hearings and a lot of filing fees. By setting up your estate so that probate concerns can be dealt with through the estate planning process, you can significantly reduce the time involved for disputes.
3. Financial Security
An important reason to set up your estate is that you can have some financial security. Because the assets can be protected from potential creditors, you'll no longer have to worry about losing everything you have worked so hard for or about having to sell assets to pay creditors.
If you can organize your assets properly, you'll also have some money left over after paying off debts and providing for your family. This is a great thing to do as you age and begin to collect the benefits of the pension plans many companies offer their employees as part of their benefit packages.
Estate planning schemes can help you limit the time you spend managing your assets and liabilities and ensure that you have adequate funds to support yourself and your dependents when you pass away. This involves the liquidation of some assets, freezing others, transferring insurance policies and retirement accounts, and creating trusts. You may also want to create a retirement fund using the funds from your retirement account to avoid the accumulation of interest on the retirement fund. This way, the entire fund is not affected by the changing prices at the stock market.
4. Prevent Family Conflicts
You probably have heard about family conflicts regarding inheritance or division of assets. When you organize your assets or estate early on, you'll prevent this from happening. Your will should cover all your properties and who'll be responsible for handling them once you're gone. A lawyer should be present to explain your choice and to ensure that whatever is stated in the will is followed accordingly.
Summary
Estate planning is the act of arranging and anticipating, for the proper management and disposition of estates. Proper estate planning is essential to provide financial security and to protect your family and your chosen dependents from any conflicts. Make sure you talk to a lawyer about planning your will or organizing your estate to make everything legal.
