Why estate planning is necessary
ESTATE PLANNING is far more than arranging for the transfer of assets after death. It is a lifelong process which includes acquiring, using and preserving assets and arranging to transfer them during life or after death in the most effective way.
A good estate plan provides income and security for you and your family during your lifetime. After your death, it provides funds to meet claims on your estate and provides sufficient income and security for your survivors.
To begin the process, determine your objectives. Do you, for instance, want to provide for the education of your children or provide lifelong support for your spouse? Next, establish how these objectives are to be met. Determine if the transfer is to be made during your lifetime or after death, and determine the form of transfer such as by joint ownership, a will or a trust.
To put the plan in place, consult a qualified professional competent to provide the service you need if necessary. Execute and sign necessary documents, and in acquiring assets, register ownership in the ways that bests meet your objectives.
Because circumstances change, it is important to monitor the plan. There are many reasons: your family may get bigger or smaller, your assets may gain or lose value, laws and procedures may change. If it is necessary to make changes, then do so.
The strategies you employ to create and grow your estate will depend on factors such as your
age, the number and age of your children, the stage of your career, your income and your assets. Know your net worth, save, invest wisely in things you understand, choose an investment policy that suits your ability to take risk, and insure your life and property.
One reason estate planning is necessary because our lives ultimately come to an end and there should be some order in how ownership passes to others. An estate plan lets you distribute your assets according to your own wishes.
It lets you determine who distributes your assets after your demise, it reduces the emotional, legal and administrative costs of
settling your estate. It allows you to provide resources for your most vulnerable beneficiaries and to protect the interest of those who mean the most to you.
A good estate plan provides liquid resources for beneficiaries and prompt settling of debt and testamentary expenses. Although wills are commonly used to transfer assets to beneficiaries, other estate-planning tools can be used quite effectively to achieve the same ends more promptly and at a lower cost.
Life insurance is a good example. So are joint ownership of assets, inter vivos gifts, and trusts. Of these, trusts are the most costly financially, but the risks associated with some such as joint ownership or the possibility of a change of mind in relation to gifts should not be ignored.
Although the distribution phase is important, pay attention to the acquisition, accumulation and preservation phases. If you do not have an estate, there is nothing to share with those who mean the most to you in life or after death.
Estate planning should not be taken lightly. It requires care and careful attention to the provisions of the law. Good estate planning is no guarantee that no issues will arise regarding your estate. For some reason, somebody often tends to emerge wanting something or wanting more, especially after your demise. With a good estate plan, you can effectively scuttle the destabilising efforts of such persons.