A lot of people mistakenly think that estate planning is merely for the rich in the world. However, this couldn’t be further from the truth. Everyone can benefit from estate planning – the significance of this should not be undervalued. This article will explain the importance of estate planning, the procedure entailed and some top tips for doing so.
Why is estate planning pivotal?
Let’s take a look at the three main reasons why estate planning is essential for all…
- Protect your assets – Firstly, this is the securest way to protect the intrinsic value of your assets. This in turn has many benefits, including; avoiding insufficient income provision for heirs, increasing profitability and continuing growth, well planned retirement solution and the integration of other policies, such as life insurance.
- Avoid your estate shrinking – If you don’t undergo estate planning then you will experience estate shrinkage due to final expenses, taxes, delays, legal and administration fees, liabilities and accounting and appraisal fees.
- Leave the maximum possible amount to your beneficiary – Finally, estate planning ensures that after your death your property is distributed as you wish. It makes certain that your loved one(s) reap maximum benefit.
What does estate planning consist of?
There are many individuals who believe merely a will equates to estate planning. However, there are several more components that need to be brought into the equation. Essentially, estate planning consists of the following…
- Will – Of course the will is the main component of estate planning. This legal binding document states how your money, property and assets will be divided up and who they will be left to. However, this is not all…
- Trustees and Beneficiaries – In addition to this you have the beneficiary – the individual being left your property. Nonetheless, you may need a trustee i.e. an individual or company who can manage this until a time that the beneficiary is allowed access to the property, e.g. once they turn 18.
- Power of Attorney – Power of Attorney is a legal document giving someone permission to act on your behalf once you can no longer do so. They are responsible for everything from childcare to financial disputes. They can even make decisions regarding your own healthcare if you are in a position whereby you are unable to do so.
- Medical Directives – Finally, medical directives contain your wants should you be involved in a serious accident or become victim to a serious illness.
Advice for estate planning
Before you proceed with producing an estate plan, take note of the following tips…
- Seek aid from the experts – Estate planning is pivotal and there are those who are experts in the field. It is always recommended to benefit from their help. From tax professionals to estate planning attorneys; the aid on offer is vast and can prove to be extremely beneficial.
- Minimise estate and income taxes – If you believe your beneficiaries are going to be stung by estate and income tax then you may wish to consider leaving them your tax-free assets and then leaving your taxable assets to charities for instance.