Understanding Estate Planning and Its Importance
The word “estate” is something you may relate to a mansion, expensive art and antiques, large stock portfolios, and other costly assets such as yachts, cars, and fine jewellery. Most of us think that these things are owned by high-net-worth individuals, particularly the elderly ones who own and leave behind them after passing away.
However, estate planning is not only for the ultra-wealthy or the very old. Regardless of how old you are or what your financial status is, everyone can benefit from owning an estate plan— assuming you have properties or possession to leave and people to leave them to.
With that being said, we will be discussing what estate planning is and its importance. If you’re interested to know more, then keep on reading!
What is estate planning?
An estate is actually everything you own, such as your home, car, bank accounts, life insurance, investments, furniture, property, and personal possessions. An estate plan provides you with a say in how these things can be properly given to the people or organizations you care about.
Having a plan will organize your affairs and leave written documentation of your intentions and wishes. It designates how you want your belongings, property, cash, and financial assets issued.
So, if you are not able to plan these decisions and designations while you’re still living and able, probate courts and state law will be the ones to do it after you’re gone. Also, the results may not reflect the desires you have or suit the needs of your family.
Main Reasons Why Estate Planning is Important
- Estate planning is different from a will
A lot of people think that a will and estate plan are the same things, however, this is not true. Although both estate plans will offer instructions for how your assets and goods should be managed after your death, estate planning has much more. It may also include the following:
Strong powers of attorney to designate certain people to come up with medical and/or financial decisions on your behalf if you can’t or are unable to make the instructions
Medical instructions to define the types of medical treatment you like or not if you turn to be incapacitated
Beneficiary appointments to expound who must obtain money from life insurance policies, retirement accounts, annuities, and other financial accounts
One or more trusts to clear the way for passing property to your heirs and even provide tax advantages for both you and your beneficiaries
- Estate planning protects young children
Of course, no one expects of dying young, but if you’re the parent of little children, you must prepare for the unimaginable. This is where the will part of an estate plan enters the picture.
In order to make sure that your kids are cared for in a manner that you think is best for them, you must name their guardians in case an event you and your partner die before the kids reach 18. Without having a will that provides the name of the guardians, it will be up to the court to step in and determine who will take care of your children. You can talk to lawyers in Central Coast to help you create an appropriate estate plan that will suit you and your family.
- Estate planning saves more money and time
If you pass away without creating a will, this means you are “intestate”, and the rules of the state where you live and own property identify what happens to your possessions and who grants them away. The probate court needs to choose a representative to distribute your assets.
In most cases, the spouse who is left gets the job. But if you don’t have a surviving partner and no other close family member is willing or capable of the job, the court can name a public trustee to distribute your assets according to state law.
As these things are happening, no one would be able to touch your assets or carry out your instructions since they’re frozen. After the court system reviews every detail of your estate pays off debts, applies state laws, and come up with decisions about how to allocate your possession then directives can be carried out.
The estate pays their fees as the probate process includes paperwork and court appearances by lawyers. This can be time-consuming, it can take months and even years, particularly in huge cities or affluent countries. With all the legal bills, things can end up being too pricey for surviving family members.
You may hugely lessen the time and expense of passing away intestate by estate planning.
Bottom Line
Estate planning is for everyone and it doesn’t have to be an expensive process. With the help of an experienced estate planning lawyer, you will have an estate plan tailored to your financial affairs, needs, and family situation. So, if you’re thinking of doing this, the sooner you start, the better!
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