Estate Planning & Why You Should Do It

Estate Planning & Why You Should Do It

Estate planning is the act of making preparations to manage one’s assets during their lifetime or in the event of their untimely passing. Estate Planning is often seen to be something that only the rich would do in order to protect their assets. Despite this contrary to popular misconception, estate planning is not only for the rich or those with large pools of assets. Anyone with any kind of property be it movable assets (i.e. physical cash, bank accounts, investments, life insurance, cars, luxury goods, jewelry) or immovable assets (i.e. land and properties) can and should secure your assets via a planned estate.

A planned estate includes instructions as to how to manage your assets during your lifetime as well as after your passing effectively making it a “living Will” whereas a Will on the other hand only provides for instructions as to the management of your assets AFTER your death. A Will, albeit important is only one of the many components that make up the estate planning process. The question then becomes, why is it important to have estate planning?

Saving your savings and time

The most obvious reason as to why estate planning is important is, with a planned estate you can avoid unnecessary waste of time and money. If you happen to die intestate (i.e. die without a will) then your assets will be frozen under the law and when this happens nobody will be able to touch your assets. It is then where government bodies, lawyers and other related parties will have to thoroughly sieve though the assets for any debts and/taxes to be repaid before eventually deciding on how to better divide the assets. This process will inevitably take many months or even years to complete and result in the “shaving down” of your asset in order to pay the fees of all the parties involved.

Inadvertently, dying intestate will also increase the cost of spending for the beneficiaries and/or family members involved in claiming for your estate as they will have to engage with lawyers in order to deal with the long legal procedures as well as the large amount of paperwork involved. This might inadvertently end up costing more than the actual sum of the estate. Hence, having a planned estate can ensure that you and your chosen beneficiaries avoid such a problem in the future as everything will be written down in detail.

Ensuring your children’s future

Seeing as how the lack of estate planning can impact your assets, it should be clear that estate planning is also a good way to ensure security for your family and/or beneficiaries; the people you have deemed fit to inherit your assets. However, to only think of estate planning as a financial protection tool would be limiting, although you can allocate assets to ensure the financial security of your children you should also plan for who to take guardianship of your children if you are no longer here.

Written within your estate plan should arrange for the person of your choosing to be the guardian to your child and/or children in case you are no longer able to care for them. Hence to protect your children and their future wellbeing, you should appoint a guardian for your children whilst executing your estate plan.

Self-preservation

A plan to protect others when you are unable to is the corner stone of estate planning, however an estate plan can also include instructions as to how you would like to be taken care of and by whom, should you enter a vegetative state and become unable to communicate your wishes freely, essentially giving you a form of insurance that you will be taken care of in they way that you want.

This can happen in a couple of ways, starting with an estate plan that includes durable “Powers of Attorney” which essentially allows you to appoint an individual to make financial and legal decisions on your behalf, with regards to your estate thereby allowing you to appoint someone who you trust to be in charge when you are unable to do so. In addition to that, you can also appoint a healthcare proxy. This allows the person you have appointed to make healthcare decisions for you if ever you are unable to communicate your wishes directly.

 All in all, having your estate planned and all of your affairs in order will not only ensure the smooth transition of assets to your desired persons, but it can also help you and your loved ones avoid headaches and complications that comes along during those emotionally turbulent times when you eventually pass or if you unfortunately meet an accident which leaves you unable to communicate. Reiterating the genesis of this article, anyone with any asset that is worth protecting should consider having a planned estate.

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