What is Estate Planning ?
What is Estate Planning?
A young couple, both in the early stages of their careers in visual arts, recently announced that they were expecting their first child. We reminded them that this is an especially good time to start their estate planning. “Estate planning?” they exclaimed, “but we rent!”
It’s a common misconception that estate planning is only for those with an “estate” in the sense of owning land or real property. You don’t need to be wealthy to need an estate plan. A properly created estate plan establishes a safety net for your assets, lets you choose who you would like to inherit your possessions and valuables, and reduces taxes on what you leave behind for beneficiaries.
In addition to protecting assets for your family members and loved ones, an estate plan also outlines who can make financial and healthcare decisions in the event you become incapacitated. Important end-of-life decisions, such as whether you want to be buried or cremated, are included, which helps relieve the burden on your family to make these tough calls.
If you have children, it’s important to plan for the worst case scenario. Who will be the minor children’s guardians in the event you pass away? You also may appoint a guardian of the child(s) estate, someone who helps manage inherited assets until the child reaches adulthood (generally 18 – 21 years old). The estate plan can also dictate the how’s and who’s” of financial support and their asset distribution for their child and even stagger and limit unfettered access to inheritances.
If you have a business, you can designate who will be the successor, such as a family member, or business partner and develop more detailed strategies to incorporate business succession planning. You can also plan for philanthropic goals, such as, leaving assets to your favorite charity, structure lifetime gifting, or plan giving through trusts such that you provide more for your loved ones and pursue philanthrophic goals. You can even plan for someone to take care of your beloved pets!
Another good reason to create an estate plan is to avoid or mitigate the probate process. Probate is the legal proceeding by which the court distributes your assets upon your death. Without an estate plan, the court will decide who will get your assets, and that can get ugly! The court doesn’t know who in your family is responsible, and who is reckless with cash.
The probate process happens whether or not you make a will, but you can avoid probate all together if you put your assets in a trust properly. Revocable Living Trusts were created to help people avoid probate because the property in a trust passes directly to heirs.
The point is, estate planning should be a concern for everyone. The most basic estate plan, with a will, or with a revocable trust, provides peace of mind and certainty for now, and also, lays the foundation for future planning, in stages, as your family, business, assets, wealth, and dreams grow.
There are many factors to consider, so if you are interested in learning more about how estate planning can help you, please give us a call at 877-780-8955 or send an email to firstname.lastname@example.org .