Estate planning is giving out instructions on how your estate should be managed and distributed after you pass away or you are unable to care for yourself at any point in your lifetime.
Estate planning can also be defined as the spelling out of the aims and objectives of an estate as described by the owner.
It ensures that your assets are distributed in the manner in which you approved of
Estate planning tells people how you want them to handle your medical and financial decision if you are unable to do so at any point in your lifetime.
An estate plan helps you feel confident about your future, knowing fully well your loved ones, family, and finances will be taken care of after your demise.
Once you own a property, you should plan for your estate. Wills and trusts can always be modified at any time to account for any changes in your real estate or family size. Hence, you should plan for your estate immediately after you own a property.
A widespread misconception is that only the wealthiest individuals need estate planning. The fact is that everyone can benefit from estate planning.
Without an estate plan, your asset may not go to the right person(s). It may be held up in probate for years. The probate may do what seems best in its judgment. You can't be sure the judgment of the probate court will go your way.
Advantages Of Estate Planning
1. Encourages orderly transfer of assets: A comprehensive estate plan will outline who gets your real estate.
Through an estate plan, you can transfer your asset to friends, family, or even charity organizations.
These beneficiaries, however, will have to abide by any terms and conditions stated in your estate plan.
2. It is tax-effective: Estate taxes and other expenses can be minimized with just a little bit of estate planning.
When estate taxes are reduced, beneficiaries will get more of the estate/money you reserve for them.
3. Plan for your immediate family: No one is immortal. If you should ever become incapacitated or passed away, an estate plan will provide adequate money for the general upkeep of your family.
If both parents die, an estate plan will appoint a guardian to care for your children(especially minors)
4. Support a social cause: We have all heard of charities organization being financed by the deceased.
When they were alive, they usually allocate a portion of their estate to those projects. If you are committed to a particular social cause, you too can do the same.
5. Provide for those who may need: Through an estate plan, you can allocate special trust funds for family and friends(like the physically challenged) who may need them in future.
6. Smooth continuation of your business: Most businesses collapse at the death of the owner. This is mostly true for businesses whose owners do not have an estate plan in place.
Ensuring the smooth continuation of your business is yet another reason why estate planning is important.
With an estate plan, you will be able to delineate how you want your business to be managed and operated after your passing.
7. Eradicates family wringle-wrangle: Without an estate plan, a wringle-wrangle may ensue between family members when the estate owner passes away.
This may be caused by the so-called cash grab motive. Such a wringle-wrangle may lead to litigation between family members.
Avoiding family wringle-wrangle is yet another reason why estate planning is needed.
In an estate plan, your directives will be clearly stated, thereby, eradicating the family wringle-wrangle that would have occurred if such a plan is not in place.
8. Clarifies policy decision: The estate plan clarifies policy decisions by informing all those concerned with the estate regarding their purpose and function.
These will include not only estate staff but tenants and outside specialists who contribute to the management function of commanding and motivating.
The estate plan provides a focus whereby the diverse participant's estate management can be directed towards the same end.
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