Why You Should Seriously Think About Estate Planning Now
One thing is certain about life: We don’t know what’s going to happen next. We are uncertain of what tomorrow holds. Yet, we want as much as possible to plan for the future. We want to have even that small amount of certainty. So, we are careful in making decisions now that will affect the future. Also, we want as much as possible to make decisions on our own, rather than allow other people to make decisions for us.
Many individuals, especially those who have a number of assets to pass on to their chosen and rightful heirs, arrange beforehand which properties and other assets would be given to whom at their appointed time and once certain conditions are met. This legal process is what we call “estate planning”. However, estate planning is more than just deciding and arranging to whom each asset should go. We’ll talk about this in a bit and why it is important to seriously think about it now.
Estate Planning Defined
To understand what estate planning is, we need to understand first what an estate is. Basically, an estate is a person’s net worth as based on the law. Net worth includes how much money you have, your bank accounts, business, home and other real estate properties, car, and many other assets that you possess. It must also be noted that an estate would mean the amount of a person’s debts, too. So, before the heirs receive their inheritance, those debts are settled first using the person’s assets itself. Whatever that’s left is the final amount of assets that would be transferred to the beneficiaries.
Meanwhile, we define estate planning as the process of legally making advance arrangements regarding asset distribution to chosen heirs. Estate planning would also mean choosing a minor’s legal guardian in case his parents pass away before he is legally accountable for himself. In addition, this legal process also covers decisions and arrangements regarding healthcare—what treatments are acceptable or not acceptable for a person and who might be given permission to make healthcare decisions for him in case he is unable to do so.
The most popular estate planning documents are a last will and testament, trust, healthcare power of attorney, living will, and financial power of attorney. Learn more about that here. A last will and testament is the foundational document of any estate plan. It lets you decide who will receive your properties when you’re gone as well as who will take the guardianship of your minor children. A trust, on the other hand, does not deal with child guardianship arrangements. It can only allow the settler who is the person who creates the trust, to make prior arrangements for his assets to be given to certain beneficiaries who can be either persons or organizations. A trustee, often a person or an institution, holds the assets until a trust’s specific conditions are met. Once these specific conditions take place, such as a settlor’s death or when the beneficiaries are of legal age to be responsible enough to care for the assets they inherited, it would be the time for the trustee to formally transfer the assets to the beneficiaries.
While it is way easier to come up with a last will and testament as compared to a trust, the latter has certain serious advantages. Though creating a trust is a longer and costlier process, it doesn’t need to undergo a probate process later on. Therefore, the beneficiaries could easily obtain their inheritance once the conditions are met. It is important that you discuss with a qualified lawyer matters regarding estate planning and types of trusts to help you determine what’s best for your situation.
Benefits of Estate Planning
Why care about estate planning anyway? First of all, it gives you the autonomy to make important decisions for yourself in advance. So, when the time comes that you’re unable to make those important decisions, you already have a plan that’s legally approved to be granted no matter what happens. For example, a living will allows you to cite specific healthcare procedures that you either approve or disapprove since it is your right to personally decide what healthcare procedures are acceptable or not. And so, with a living will, you can be confident that the doctors who would take care of you will respect your decision regarding medical procedures.
The second important benefit is that estate planning gives you an assurance that your assets will be inherited by the rightful heirs of your choice. Without an estate plan, the state government will take the responsibility to make important decisions on matters such as child guardianship and inheritance—who should be the rightful heirs of your assets. When it comes to big, personal decisions like these, you’ll surely want to make the arrangements yourself, not the state government. Find out what happens if you don’t have an estate plan: https://www.thebalance.com/what-happens-if-you-dont-have-an-estate-plan-3505136
Third, an estate plan helps avoid family disputes later on. We’ve seen so many stories of siblings fighting over the division of inheritance. And when it comes to disputes like this, it would indeed be a long and tedious process to solve. Besides, have you ever think about the ruined relationships among the family members when this happens? If you’ve made your decision in advance, your beneficiaries would most likely respect that. Because, what can they do? It’s a plan that’s legally approved and they should follow the law.
So, when should you start to create an estate plan? Once you’ve acquired pricey assets such as real estate properties, a profitable business that continues to progress, cars, and a huge money in the bank, then it’s about time you plan for the future. When it comes to healthcare, it is also important to make an appropriate estate plan as well, as soon as possible, especially if you strongly disagree about certain medical procedures. Also, generally every five years and whenever major life changes occur, your estate plan should be reviewed if some adjustments should be done.
When you seriously think about estate planning now, it can help you prepare for the future, give yourself the autonomy to make important decisions, and avoid hassles later on.