There is more to estate planning than creating your will before you pass away. It involves setting up the transfer of your hard-earned assets to the people you believe are the most deserving. This is what wealth management is all about. It is a matter of protecting your assets when you are living and when you pass away.
The Value of Estate Planning
Most people think that estate planning is reserved only for millionaires and elders. However, estate planning is for every person who has assets that are worth passing over to the next generation.
Let’s explore a few examples below about why estate planning is very important.
- It removes the tax burden of transferring the estates to the legal heirs, had it not been planned earlier.
- Saves time and money that would be needed to follow up on what happens to your assets by those left behind if there was no will to identify the executor of your estate.
- It protects your children in the case that you die without a surviving spouse to take care of them.
Without an estate plan for your future, your hard-earned assets will be inherited by the wrong person. Let’s read some tips to get you started on planning your journey to help you avoid mistakes.
1. Make a List of Your Assets
Without consulting a professional, take a pen and paper or a computer for that matter and start listing down all the assets that you have. Even though you may think you don’t have enough, when you start listing down you will find more than enough to prompt the planning process.
Examples of assets that can be transferred to heirs are:
- homes, land, and real estate investment
- cars, motorbikes, and boats
- savings in bank, stocks, bonds, and jewelry
- art collection, antiques
Once you have listed all of your tangible and intangible assets, contact a professional to take further action into estimating their value. This allows equitable distribution to all parties left behind.
2. Write a Will
This is a legal document that gives directives on how your assets will be distributed. A will allows you to account for all of your family needs in case of death or another adversary. Depending on the value of your assets consider executing/identifying following the details in your will.
- Ensure you have enough life insurance —this ensures that your identified beneficiaries get paid a sum of money to use for whatever purpose they want.
- Name a guardian for your children and a backup guardian. This will help protect your estate and family up until your beneficiaries are able to do it on their own.
- Document your wishes for your children’s care. Not everyone will support your ideas and goals for raising your children. Make it clear, so that they will abide by your wishes.
3. Establish a Trust and Additional Directives
While you are still alive, set up a trust that protects your assets by designing where your assets go. After your death, the trust assets will be transferred to your beneficiaries. Therefore, if you think your heirs are not wise enough to handle your assets, you can appoint a trustee to handle your assets. Your estate plan should also include other important legal directives like financial power of attorney, medical care, etc.
4. Review the Estate Tax Laws
Estate taxes cannot be avoided while you are alive. However, if you do not plan properly you can end up leaving your beneficiaries a lot of tax related issues. Estate planning will help you minimize taxes on inherited assets. There are several ways to take care of your taxes. You can get the best tax planning advice from Saddock Wealth’s team of tax professionals.
5. Avoid Family Conflicts
Review and discuss your estate plan with all of the people involved to ensure that everyone agrees. Your family will appreciate that their views are also being respected. Even though they are the beneficiaries, they must be aware of the situations to prevent future conflict.
6. Plan to Reassess
Your estate plan needs to be updated whenever circumstances change, whether it’s for better or worse. In another instance, even though your circumstances may not have changed, the laws may have changed. Therefore, make sure to revisit and update your plan accordingly.
Estate planning with Saddock Wealth
Establishing an estate plan is very important, and it’s difficult for you to do on your own. The tips above are there to guide you to avoid some common mistakes. However, seeking professional help can guarantee to make this process easier.
Our financial advisors at Saddock Wealth are here to help you navigate this challenging but crucial task. We have tax experts and estate advisors who will work with you one on one. This way we can ensure that you create the best plan for your estate’s future. Contact us today to establish a solid plan for your future.