You might have heard your office colleagues discussing something about estate planning. Most individuals never think about having an estate plan because this type of financial service is often associated with wealthy individuals. But the truth is- every person has an estate and needs to create an estate plan. If you don’t know anything about estate planning, let’s take a look at the meaning and importance of this type of financial planning service.
What Is Estate Planning?
Even if you don’t have assets and properties worth millions, you still have an estate and so do your colleagues. An individual is said to have an estate if he/she owns a home, car, savings account, investments, precious jewellery, some real estate, or life insurance. No matter how big or small your house is or whether you own a few BMWs or an economy class vehicle, you cannot take these assets with you when you die. So, what happens to your home, car, and other possessions once you pass away? When it comes to your life’s hard-earned money and other assets, you want your loved ones to inherit those things. We work hard to safeguard the future of our loved ones. And this is where estate planning comes in!
Estate Planning is a type of financial service that involves creating a plan that determines who will eventually receive your assets after your demise. Besides death, this plan also includes details of how you wish your business, health, and other affairs to be handled in the event you become incapacitated to handle them on your own for any reason. So, estate planning allows you to control your assets and other affairs in the event of your incapacitation or death. When you have a proper plan in place, it ensures that your assets are inherited by the people or organizations you care most about. This plan ensures that your final wishes are carried out.
Need & Importance of Estate Planning
Estate planning is a comprehensive and complicated process. This isn’t something that you can handle with the help of online DIY tutorials. An estate plan has several components and only an attorney experienced in estate law can draft this type of document. This plan not only mentions the names of who will receive what but also includes more instructions such as what you want them to receive and when they are to receive it. It also includes instructions regarding your medical care and handling financial affairs if you become incapacitated before you die. With the help of a qualified estate planning lawyer, you can also find a solution to minimize the amount paid in taxes, legal fees, and court costs.
A complete estate plan includes details of how to transfer your business at your retirement, disability, incapacity, or death. Also, it specifies the names of guardians for your minor children’s care and inheritance. If you have an ex-spouse or creditors, your attorney can evaluate your specific financial and family situation to formulate the best strategy. It is noteworthy here that estate planning is an ongoing process because your life and financial situation keep changing. It is not a one-time plan and needs to be reviewed as your life changes. So, a typical estate plan includes assets such as:
- Real Estate
- Retirement accounts
- Antiques and Precious Paintings
- And more
A complete estate plan includes details of inheritance of your assets, minor children’s guardians, and the name of an executor to oversee the estate plan process. You can choose a power of attorney to make financial decisions and medical power of attorney to handle your medical decisions.