Nobody wants to think about death, but when you have assets, you need to sort them out according to your wish for real peace of mind.
Estate planning is when you want to ensure that every asset, whether it is your investment, property, or savings, is distributed as you wish after your death. You can start the process by making a Will.
When your financial aspects are not considered carefully, you could leave a huge inheritance tax burden on your loved ones. And that’s something no one wants to leave behind.
What is Estate Planning?
Almost everyone has an estate. You have an estate if you have a car, savings account, life insurance, home, furniture, personal possessions, or investments. So simply put, estate planning is the preparation of tasks where an individual’s assets are managed beforehand in case of incapacitation or death. And you want this to be handled with the least amount of legal fees and taxes.
Benefits of Estate Planning
Estate planning is something everyone should do. Estate planning has many reasons, including preserving family wealth, safeguarding spouses and children, and providing an education fund for children or grandchildren. Let’s see the benefits of estate planning:
Family wealth preservation
You can protect and preserve your wealth through estate planning for future generations. You can also minimise the inheritance tax on your estate if you have a trust. So, this strategy ensures your assets are not lost to taxes and are passed on to your family.
To avoid intestacy
Estate planning allows you to distribute your wealth the way you want, designate the right beneficiaries, and reduce the possibility of disputes. So, if you don’t have a proper estate plan, your assets may be distributed according to the rules of intestacy, which might not align with your desire.
Business succession
If you have a business, you want the business to continue even after your death. Consideration of an estate plan may help you hand over the business ownership to your desired successor without any legal issues.
Vulnerable beneficiaries
Estate planning may establish a trust to protect the inheritances of the beneficiaries who are minors or have disabilities until they can manage their responsibilities.
Control on assets
Estate planning gives you complete control over your assets, and you can decide everything independently. You can choose how your assets will be distributed, specify the asset successors, receiving time, and under what conditions they will accept it.
Peace of mind
What is the real reason behind the estate planning? It is the peace of mind, undoubtedly. Knowing your estate is taken care of, and your loved ones will receive your legacy when you are absent takes away all your stress.
Estate planning process
Estate planning is a crucial step where you can ensure your wishes are respected, your loved ones are taken care of, and your assets are distributed according to your wish, even though it may sound daunting. Here’s how you can start the probate process.
Asset evaluation
Start by calculating everything you have– savings, investments, properties, personal assets, and digital assets. When you are well aware of your belongings, it’s easier to make informed decisions.
Set a goal
Defining a goal helps to structure the estate plan better. Ask yourself what you want to achieve– protecting your business, supporting your family, or donating to a charity.
Choose the executors and beneficiaries
Select someone trustworthy or an institution to handle your estate. You need to ensure the estates will be distributed properly and identify the inheritance of your assets.
Draft key documents
Drafting key documents is essential, including creating a Will, setting up trusts, and selecting a power of attorney for financial decisions. These documents ensure your estate planning is legal.
Minimise tax implications
A well-executed estate plan has many effective strategies to reduce inheritance taxes, leading to the preservation of wealth for the beneficiaries.
Updated plan
Life events such as significant changes in investments, marriage, and a child’s birth might impact the estate plan to keep things relevant and updated.
Common misconceptions about estate planning
Estate planning is the most important step in protecting and passing the legacy to your loved ones. But without a plan, it might be a complex process. Here are some common misconceptions which everyone should know.
Estate planning is for wealthy people
There is a misconception that estate planning is only crucial for those with significant wealth. But the reality is everyone has wealth, whether it’s personal belongings or savings. So, estate planning helps distribute the wealth according to the wish.
It’s only needed later in life
People think estate planning is only considered during retirement or old age. However, having an early plan can safeguard your family in unpredictable situations.
Will is enough
Having a Will is vital, but it may not cover everything. Many other aspects, such as trusts, powers of attorney, and healthcare directives, cover areas that a will doesn’t cover, which include avoiding probate, maintaining medical care preferences, and managing incapacity.
Estate planning is expensive and complicated
Although estate planning involves some costs, not having a plan causes more expenses and mental stress for your loved ones; when you work with a professional solicitor, they ensure affordable and simple estate planning.
Family Will manage
Leaving everything to family members often leads to more conflict, which can be time-consuming as well. A clear and specific estate plan can avoid legal issues and misunderstandings.
In short, estate planning is not just for wealth; it’s more about protecting the legacy and peace of mind. Working with experienced probate solicitors can make the process smoother. If you are still unsure, we suggest you contact us and let us help you. For more information, visit our LinkedIn and stay connected.