Even though you may not realize it, you do have estates and assets. This is something that everyone has–it covers your properties, savings accounts, life insurance, trust funds, furniture, home, car, and personal possessions.
Estate planning can be for just anyone, but being an entrepreneur it is essential. You must know the fine details of estate planning as it can greatly benefit you as well as your next generation.
So, everything you own will have to go through estate planning.
What Is Estate Planning?
Estate planning is the act of making preparations and leaving instructions for the management of your asset in the event of death or incapacitation. This usually comes in a will where instructions of the settlement of an estate and bequeathing of assets are written up.
Typically, to write up your estate plan, you’d need the help of a lawyer that’s experienced in estate law.
Why Should You Do Estate Planning?
Now that you know what estate planning is, here are some reasons why you should do it.
1- Tax Shield
One of the main reasons why you should do estate planning is to have a tax shield. When it comes to your estate, if you don’t have a plan, the government will charge estate tax on anything that your heirs will transfer to their name.
For instance, when you’re gone and your heirs want to withdraw the money from your savings account, they won’t be able to get it in full. This is because the estate tax will be deducted from that. On the other hand, if you have property wherein the title will get transferred to your heirs when you’re gone, it’ll also get taxed a substantial amount.
To avoid this from happening, you should have estate tax planning. There are ways to navigate through the estate tax. Your estate lawyer should advice you on some alternatives in order for your heirs to avoid paying too much. One way is to give your assets as a donation while you’re still alive. There’s still donor’s tax involved, but it’ll be significantly lower compared to estate tax.
2- Avoid Arguments and Disputes
A lot of families break up or have arguments when it comes to distributing assets when a family member is gone without a will or estate plan. Having an estate plan written up will help you avoid any arguments and disputes within the family.
The biggest advantage of having an estate plan is being able to supervise and manage the distribution of your assets to your chosen ones through your estate lawyer. This way, you’ll have peace of mind that everything will go to their respective heirs.
In addition to that, you won’t have to worry about your assets, including insurance proceeds, being the reason that your family would be fighting about.
3- Healthcare Decisions
Estate planning is also for situations wherein you become incapacitated and unable to make health-related decisions for yourself. Part of your estate planning will be an appointment of a family member to make medical-related decisions for you.
In addition, you can also specify a few instructions in your estate plan with regards to your preference for life-sustaining measures, in the case you reach a terminal condition like a coma.
4- Protect Young Beneficiaries
No one thinks or expects to die young, but you’ll never know when the time comes. If you have children, you won’t know what might happen to you and what age your children will be at that time. So, in order to protect your children as beneficiaries of your estate, you need to prepare for this kind of scenario.
By setting up a will, you can designate how much will be inherited by each of your children and at which age. In addition, you also get to leave instructions on who’ll become the guardian of your children until they reach legal age.
5- Succession Plan
If you have your own company or business, part of estate planning is also having a succession plan for your company. This will appoint the people who’ll replace you in the company and keep a good foundational structure even if you’re gone. This will steer a clear path for the future of your company even though you’re not there to run it anymore.
By doing this, you’ll be securing the financial health of your company and family as well. Additionally, what you’ve built over the years won’t go to waste.
You never know what might happen in the future, so it’s better to be prepared more than anything. This includes having your estate plan as it won’t only benefit you but also the family members you leave behind.
Your hard work will be for nothing, and you’ll have peace of mind that whatever you own will go to the people that you’ve chosen.