Estate planning, in general, is a broad term, covering many different aspects of an individual’s financial affairs. It refers to the practice of planning and organizing that can start at a very young age and the future management and disposition of the assets of an individual. This is a proactive action in the event that the individual becomes incapacitated, dies, or becomes mentally incompetent.
Then you may ask, is asset protection necessary? This is, after all, what constitutes a bulk of estate planning.
Estate planning is necessary and should be written down to ensure that the plan is documented. If the individual does not plan a strategy, they could be left with assets that were not given to the beneficiary properly or in an incorrect amount. This could lead to problems down the road if these items are needed to be retrieved at some point. Some plans are better suited to specific situations, while others may not be applicable.
That fact alone would highlight how important it is to go through the estate planning process. Other compelling reasons include:
It Enables You To Choose Those Who Will Inherit Your Assets
You don’t have to be a multi-millionaire for you to go through estate planning. For as long as you’ve got assets to distribute to multiple heirs, estate planning will do you good. Otherwise, if you don’t make this determination ahead of time, the chances are that this decision will solely be left to the state. There might be that situation whereby your assets aren’t distributed in the manner that you so desire. Perhaps, some assets may not even be given to the rightful heirs. After all, in your absence, how else can the authorities determine whom to give a specific property?
Without a written plan, the family members you left behind will have no other choice but to seek recourse in the courts. This can be a long, costly, and arduous process. It may even cost other heirs their inheritance. An estate plan can save your heirs from this messy situation.
It Protects Your Beneficiaries
The best thing to do when you want to protect your heirs or beneficiaries from creditors is to make an estate plan. You can choose to pass your estate through a trust or make an estate planning agreement that will name a trustor who will distribute your estate after you die.
All the more that this becomes necessary if you’re the sole breadwinner of the family. Should you pass away so suddenly, the rights and future of your beneficiaries are protected.
It Enables You To Update And Override Your Existing Will
Everyone has a pre-written will, whether you’re aware of it or not. This is because when you die, there’s a default written will, which is also known as the intestacy statute. This means that the state will distribute your assets on your behalf to the heirs you’ve left behind. Unfortunately, in most cases, the distribution may not be exactly as you wish. Hence the need for estate planning. That way, you can override this by creating your own will.
Here are other means that estate planning enables you to override this existing will:
- Creating a revocable trust to protect your assets, including that of your business’, while you’re still alive
- Jointly owning your assets
- Designating beneficiaries
In estate planning, one of the most important documents to make is your will. Making a will is a way to provide your family and loved ones with financial protection. There are many good reasons to create a will. Some of these include:
- Writing a will allows you to take control of your money. This gives you more control over your family’s future because you are more aware of how your money is being used. This also enables you to ensure that your family will receive fair treatment in case of your death.
- Writing a will is also an excellent way to provide support to your family. It can enable your family to get a better deal when dealing with creditors, and it can allow you to ensure that your family will receive fair treatment in case of your death. A will can also help your family get a better deal when hiring a lawyer to help them prepare their estate.
A plan should be in place to ensure that the living trustee has been appropriately informed of the wishes of the people they plan to leave assets to. In addition, the plan should include any changes that may be necessary in case of disability, illness, or death of the living trustee. It is also good to have a plan in place so that the surviving family members can have a sense of control over their future finances. This plan is what encompasses estate planning. In a nutshell, it allows you to have full control over the disposition of your assets and the carrying out of your wishes even when you’re no longer around. For the reasons enumerated above and many others, these would only highlight even more how important it is to go through the estate planning process.