Ever wondered the fate of your assets when you pass on or when you become incapacitated? The truth is that you like most folks never entertain this kind of thought. After all, the subject of death is not something you want to imagine.
Nevertheless, the benefit of prior planning is an arsenal you shouldn’t underestimate. For this reason, you need to play your cards well. After several years of hard work, should your assets fall into unauthorized hands?
I bet you wouldn’t wish that for yourself. So, what’s the perfect solution? You need to consider estate planning. When it’s done in the right way and by the right professionals, it can save you a tad both while you’re around or when you’re gone.
This information is invaluable and getting it can be daunting. Therefore, in this piece, you shall discover more about estate planning. Also, you shall learn how you can use the vehicle to preserve, manage, and distribute your assets.
So, let’s get started!
The Purpose of Estate Planning
Estate planning is the vehicle you use to ensure your assets– houses, stocks, life insurance or pension– fall in the right hands. This is necessary when you are dead or still alive but unable to administer your estates.
You need the services of a probate lawyer to protect your wealth. Whereas there are multiples techniques of estate planning, two principal ones are; creating a Will and a Trust. Here’s what you need to know about the two.
When you create a Will, you identify in advance the person (s) to inherit your assets. Also, in the Will, you can mention the right guardian for your underage children when you are no more.
Writing a Will is tedious as you have to take it through a probate process. However, the benefits outweigh the hassle.
On the contrary, with a Trust, you appoint a trustee that administers your property wishes on behalf of a beneficiary. A beneficiary can either be your child (ren), a charitable organization or an educational institution.
The good news is that you can create a Trust when still alive or via a Will. However, if you do it through a Will, it will begin to operationalize when you pass on. Thus, effective your demise, a trustee takes charge of your assets.
Also, creating a Trust saves time compared with a Will. Whereas a Will goes through a probate process to be effective, a trust doesn’t need to go the long process. The good news is that it can come into effect when you’re still alive.
So, what are some of the benefits of estate planning? Keep reading to find out!
1. Tax Planning
Tax planning is one effective way of ensuring your beneficiaries enjoy maximum benefits from your estates. When you follow the right procedures, you reduce the amount or the value of the asset that the federal or state governments can tax.
What’s awesome is that you can counter these devastating impacts on your assets in easy ways. For one, you can consider establishing an AB trust. When either you or your spouse passes on, the trust splits into two.
For two, you can put a beneficiary through higher education using your estates. In the process, some portions of your estate are transferred to the institution where the beneficiary is studying at. Thus you reduce the taxable amount the IRS can come for.
2. Personal Needs Planning
It’s not easy to tell what the future holds. Therefore, you should be cautious about how you want to spend your life should you get incapacitated. With estate planning, you can appoint a trustee to administer your estates when you become sick or old.
Furthermore, you can opt for a life insurance policy. When this matures, it will take care of you and your loved ones. Thus, you may not need to incur extra costs when this time comes as you will have a fallback plan.
3. Organized Wealth Disposal
Would you like your state of residence to decide how your assets should be managed or distributed? I’m persuaded your answer is no. Therefore, after all the years of hard work, you need to have the right people managing your estates.
But how should you do this? You need not worry as you can accomplish this in two simple ways. You can opt for a will or a living Trust. A Will comes handy after your demise. When this happens, your preferred beneficiary takes charge.
On the other hand, you can use a living Trust even when still alive. This is especially important when you are incapacitated. Thus you’ll appoint a trustee to be in charge of your beneficiaries or yourself.
As the common adage goes, “failing to plan is planning to fail.” For sure, it’s not a good idea to wait until the last minute to plan your estates. This is an important procedure that you can do when still alive. So, why wait when you can have a Will or a Trust?
Estate planning will protect your assets from over-taxation, or mismanagement. If your estates mean much to you, then, today is the right time to take action. Consult with a professional estate planning attorney and protect yourself and your loved ones.