Did someone ask you about the question “what is estate planning?” Some people think it is related to building legacies or inheritance. Others believe that estate planning could be intimidating as it seems, and could be for rich people only.
People also get the wrong idea of planning your assets ahead of time. Estate planning relates to death. That’s why others avoid talking about that matter. But does it go that way?
In this article, you will understand the answers to these questions:
To answer the question: “what is estate planning?”, we can understand it through its own words. Estate means a property, value, or possession while planning means organizing in advance or in ahead of time.
So basically, estate planning is:
People tend to delay estate planning because they think that they do not own large assets, or people think they are too young to think about death. However, estate means anything you own, regardless of its size or quantity.
Additionally, estate planning doesn’t tell you that you are looking forward to dying. Instead, you are making everything settled before inevitable events will occur.
When you hear a weather forecast that it will rain within the day, even if you see the sun is striking, you will still bring your umbrella with you when going outside. Likewise, we know death would be unavoidable, no matter we try to escape from it. For this reason, no matter how young or healthy you are, estate planning would be a wise decision for you.
When conducting estate planning, you are organizing your possessions and designating them to the right beneficiaries that you think are responsible enough to take care of your properties. For business owners, you can properly ensure that you will leave your business in good hands. You will still have enough time to educate your beneficiaries to manage your assets properly.
Being capable of arranging legal possessions might be difficult for a grieving family. If the owner of the assets would be gone already without an estate plan, there are possibilities that conflicts might arise between family members. Creating a will is essential, especially to families with a wide range of ownership.
Estate planning could be a great advantage for the left families in the future. It will be an assurance that your family will receive enough money for their living. They may also avoid misunderstandings as estate plans clearly show the beneficiaries.
One of the most practical reasons for creating an estate plan is to lower the estate taxes. Depending on the country that you are currently residing, surcharges may apply when passing an inheritance. In some places, higher tax rates and double taxation may occur in international properties.
An estate planner can help you to emerge with the best ways to avoid or lessen those double taxation possibilities. If property owners do not have enough knowledge about legal entities and how it works, estate planning can help them to determine the laws and legislative guidelines.
You might have genuinely supported a cause or charity. Designating a specific budget as a donation may be part of your monthly wage. However, when an unexpected event happens to you, there will be no assurance that the foundation that you used to support will continue to receive donations unless you have a plan.
Good estate planning can also help you to support your favorite charitable cause continuously. You don’t have to be rich as Bill Gates to support a foundation. You may not know if your successors will continue supporting the foundation of your choice, so it is better to specifically designate a part of your inheritance for you to be sure.
Not all estate plans can be serviceable after death. Some people have their own beliefs that may affect the medical procedures they strongly wanted. For instance, others might consider avoiding blood transfusions or surgeries.
Estate planning can also arrange specific medical directives for someone or medical power of attorney. Unwanted situations such as accidents might occur that may cause someone with the incapacity to decide for their own. It will help not to compromise their strong views and respect their dignity.
You might also include your minor family members in the list of your beneficiaries. However, being responsible enough to manage your properties might worry you because of their young age.
A proper estate planning can help you to list instructions for your heirlooms. You can specifically include a condition that your beneficiaries need to reach some requirements like age or educational attainment before having control of the properties they will inherit from you.
As John Wooden stated, “Confidence comes from being prepared.” Just like what life insurance can give, you will feel less worried about the future of yourself and your family. You may still be enjoying your life right now, but you have accepted the fact that there will be an end for everything.
Estate planning will not just be useful for the future but could also be beneficial even today. Being prepared for your death doesn’t mean you see things negatively. In estate planning, you can have peace of mind today that everything will be fine if you would have already lost control of the situation.
Now, you have understood that estate planning will be beneficial to you and your family.
However, you may hesitate to start creating an estate plan because you think you’re not old enough or do not have enough assets. There are some misconceptions in some cultures that you will need to worry about your estates when you are already in retirement age.
Nevertheless, estate planning requires no age or specific amount of properties. The earlier you start, the earlier you see what to add or to remove.
Thus, here are some steps on how to start estate planning:
It is not a requirement to own mansions or big businesses to start estate planning. Make an inventory of your resources together with its documents and legal papers.
You have to decide your beneficiaries carefully and how much they will inherit. Also, by creating a contingency plan includes the strategies that you want to implement to your businesses. You may also have to include your medical health directives.
Now that you have a plan, you need to create a document that has all of the details and conditions. Create a will, trust or a paper that will speak for yourself whenever you are already incapable of doing so.
As we had mentioned earlier, estate planning also includes the consideration of the taxes that will be cost from your assets. By planning, it will minimize the possible costs or double taxation scenarios.
Momentarily, we have answered your primary question: “What is Estate Planning?” It is settling your properties, and other possessions before your incapability or death will happen. Estate planning is practical for you and your family not only in the future but also in the present times.
It is never too early or too late in estate planning. An estate plan is like an airbag in a vehicle. You may not yearn to use it, but it is more beneficial to install it in your car as early as possible.
Similarly, you don’t have to wait for desperate times to start estate planning. You shall begin now. By estate planning, you can create a document that will speak for yourself even if you are not already capable of doing so.
All these taxations, wills, or these legal entities might be new to you. Hiring a lawyer or estate tax specialist will help you to start estate planning from scratch. Moreover, there are professional mentors like Carmen Rosas, who offers legal services for planning your estates.
By booking a consultation with Carmen Rosas, you will be guided on how to start estate planning. She can assist you with creating a living trust, will, power of attorney or advanced health care directives. Her office can also provide help for making a business plan such as entity formation or business succession plan.