Most of us strive to protect our families and thrive on that. The assets you build and the money you earn is mostly to secure the future of your close and loved ones. However, most of us jeopardize the objective by failing to facilitate proper estate planning.
If it’s in your interest to see to the financial security of your loved ones after your demise, estate planning is the way to go. Making sure that your spouse, children, and other close individuals get what they deserve without fighting through the intestate succession process, is your responsibility.
Let’s understand what estate planning is and how it can protect your and your family’s future.
What Is Estate Planning
Distributing the assets that you’ve built throughout your life is the primary objective of estate planning. Depending on the value of your asset, you may need to involve a few professionals such as lawyers, bankers, and tax advisors in the process.
Although it’s seen as an after-retirement practice, accidents happen all the time. Thus, you shouldn’t wait long to name your beneficiaries. Most believe that estate planning is for individuals who have substantial wealth. However, expert estate planning lawyers in Fresno stated that it’s not true. As a long probate process costs resources and funds, families with modest assets require estate planning more than wealthy individuals.
For those who fail to plan before their demise, the state has its own plan for their families. Most often the intestate laws divide the estate between the living spouse and the children even if they’re adults and from a previous marriage. It may leave your loved ones with an underwhelming valuation that can ruin their lives forever.
How to do Estate Planning
Estate planning is a multi-step process that requires involving your financial advisors and estate planning, lawyers. Here is a sneak peek of how the process may unfold.
Prepare a Will
The first and most essential step towards estate planning is preparing a legal will. Although critical, it doesn’t need to be limited to estate planning. You can include any number of points that you wish to be initiated after your demise; including your minor children’s guardians.
However, the “wishes” can be challenged after your death. That’s why it’s recommended that you consult with your financial advisors and lawyers before making the will, and not go with online services that do little to defend your interest as the beneficiaries need to go through probate to claim the estate.
Bank accounts, insurance, and stock profiles, among several other things, can be assigned nominees. Although you should name the nominees while opening the accounts, you can assign them now, if not done before. The nominees, typically, aren’t required to go through the probate process for these assets.
Life insurance plans often come into effect either after a set period of time or in case of premature deaths. As a part of your estate planning, you must consider it before anything else. Having life insurance is like planning a part of your estate without any planning.
Upon your demise or maturity of the plan, your beneficiaries will automatically be compensated without probate.
Protect Your Assets through Non-Probate Funds
Assets like jointly owned properties, revocable living trusts, and as mentioned, accounts with designated nominees, are considered non-probate funds. Non-probate funds, obviously, don’t need a probate process to be released to the beneficiaries.
Go Debt Free
Easier said than done, but if you want your loved ones to enjoy the full benefit of your estate, you need to go debt free. The probate process, with or without a will, requires the executor to clear all the debts before the assets can be distributed. Although the executor may use your estates to clear the debts, they will be better off without needing to go through that.
How Estate Planning Protects Your Future Plans
Estate planning can’t save you from unfortunate incidents, but it can save your loved ones from having lifelong financial agony. Here is how estate planning protects their future.
Protect the Beneficiaries
It’s pretty common to have beneficiaries being sabotaged by outsiders without a legal will. Moreover, often the complexity of the estate laws allows partners to take over the business and/or assets without any regard for your family. Estate planning stops that from happening.
Moreover, if you have minor children from previous marriages who you don’t want to inherit your assets, it’s better to leave that responsibility out of the court’s hands.
Help the Children
Don’t let the court decide on the legal guardianship of your children. This is especially threatening if you have children from previous marriages who you’re responsible for. Having them taken over by incompetent guardians can ruin your plans and their future.
Avoid Family Mess
If you have a huge family or association, the estate distribution may become a mess without a will. Although family mess can still occur with a will, the chances of them winning becomes much smaller compared to intestate cases.
As the court will be responsible to distribute your estate according to the inheritance laws, the probability of it reaching the wrong irresponsible hands increases significantly—making the families suffer.
Reduce the Tax Burden
Gifts, Leaving your Registered Retirement Saving Plan (RRSP) to your spouse and children, TFSA, trusts, and many other financial plans can save your beneficiaries from paying huge taxes upon your demise. However, you need to consult an estate planning lawyer to unlock the full potential of tax savings.
Is It Necessary to Indulge Lawyers in Estate Planning
You may choose to prepare your own will through online services widely available, but they often aren’t efficient enough to support your family in their grieving time. Hiring an estate planning lawyer ensures fast action and reduces the legal burden. It’s recommended that you go with a competent lawyer.
The Bottom Line
Hopefully, you’ve understood how estate planning protects your future. Understand what estate planning is and how to do it by talking with a lawyer and financial advisor. The first step towards estate planning is preparing a will and helping your loved ones get what they deserve. You also can save your beneficiaries a lot on taxes by planning ahead.