5 Things to Consider When Estate Planning
Planning your estate is an uncomfortable, but necessary task. Lift a weight off your family’s shoulders by considering these steps.
Planning your estate is the kind of job most would prefer not to think about. Though, like any task, it is not something that is going to fix itself. Without proper estate planning, a person’s legacy can be hijacked by their inability to plan accordingly, or responsibly.
It is understandable that people are busy, and the issue of mortality can sneak up on people. But if you want those you care about to have as little as possible to worry about after your death, then you need to think ahead. Follow this list of considerations to help you plan your estate, and give your loved ones the relief they deserve during such a difficult time.
1. The size of your estate
A lot of people mistakenly feel that they don’t have an estate. They equate the word “estate” with a grand home on a sprawling property when in fact, your estate consists of anything you own that may have value. This includes jewellery, stocks, cars, cash, homes, record collections, family heirlooms, and anything else that holds some kind of value.
Think about all your possessions that have value and compile them in a list. Try to arrange them from most to least valuable and consider where they would be most useful. A good spreadsheet is perfect for this.
2. Legal advice
Most people are not experts on estate planning, so it’s a good idea to enlist the help of an experienced estate planning attorney. They can use their expertise to assist you with the safeguarding of your estate and possessions.
When you die, your gross estate is calculated. This is the total sum of all your estate assets. After this, your taxable estate is considered. This includes mortgages, loans, administration fees and anything else that may cost money.
Most people are not experts on estate planning, so it’s a good idea to enlist the help of an experienced estate planning attorney.
For the average person, the financial logistics of a death are a nightmare. Hiring a specialist attorney can save you time and money by keeping your family out of court, and advising the best tax options for your situation.
3. Your will
Many people, even those in the advanced stages of life, lack a coherent will. Perhaps they have a dated one which needs updating, or maybe they don’t have one at all. There are two aspects to a will: the legally binding side that distributes your assets, and the morally binding Statement of Wishes that outlines your intentions for your family.
A will is essential to ensure that your possessions and assets go where and to whom you want them. If you do not have a will, your estate will defer to what’s called intestate succession and the distribution of your assets will be decided either by the government or through a long-winded legal process. It is recommended that you update your will every five years.
A Statement of Wishes is an informal document that supports your will. It is not legally binding and is easily amended; however, it does provide context to the decisions that you have made in the legal part of the will.
Something that should never be overlooked is the wellbeing of children. In cases of bereavement, the emotional stability, financial security, and innocence of a child can all be affected. In this situation, there are two major areas to consider.
First, you’ll need to decide which assets will go to your children. If you have a college fund, savings account, or anything else set up for your children, then this should be considered when distributing your assets. This might mean that speculative investments, such as property and stocks, are a good option to leave to your kids.
You will also need to think about the intimate detail of guardianship of your children if they are under the age of 18. Consider entrusting this to someone who will be able to house them, fund their lives, and raise them decently. If you fail to make this decision before your passing, it will be left in the hands of the courts.
5. Family positions
A death in the family can be difficult for reasons far beyond emotional trauma. Without a formal will in place, family members will be left to assume positions you haven’t specifically assigned them. This could lead to the worst financial manager of the family gaining control over the estate, cause disagreements over the distributions of assets, or perhaps no one wants responsibility of your pet.
An estate plan assigns duties to those who will be responsible for your wealth if you become incapacitated or pass away. It allows you to provide individualized plans for each family member. This insures against unfair distribution and makes financial preparations for family members who are either too young or not responsible enough to do so themselves. (3)
The idea of estate planning can make some people uncomfortable, but it is an imperative part of life. Planning your assets, speaking with professionals, making arrangements for your children, and allocating assets and responsibilities is one of the best things you can do for your family’s well-being during such a difficult time.