What is Estate Planning and Why Should I Do It?
Hermitage, Mt. Juliet and Lebanon, TN
Perhaps the simplest way to understand estate planning is to think about it as the process of arranging all your affairs in proper order so that when the time comes, things are easy for you or surviving family members. You plan for the ownership and /or management of your estate for a time when you are rendered incapable of caring for them yourself. This removes all uncertainties regarding the administration of your properties in your absence.
A good way to improve understanding of estate planning is to debunk the major myths surrounding the process. Two of the most common ones are –
1) Only the rich need estate planning and,
2) Estate planning is the same as preparing a will.
It is easy to understand where the first misconception could have risen from. The term “estate” when taken in its literal sense in the context of real-estate, often leaves people associating estate planning with the process of planning for one’s real estate properties. This often gives rise to the question “Do I need estate planning when I don’t in fact, own an estate?”
Well, you do. And you do, because estate planning is not about planning for one’s affluent real estate properties. It is about preparing for the comprehensive set of assets that may need care and management, including bank accounts, loans, stocks, cars, jewelry, even minor children and elderly parents.
In relation to the second common misconception, it helps to remember that estate planning involves several processes, only one of which is the preparation of the will. Preparing business strategy, health care, and financial plans or tax planning are some of the other parts of estate planning.
But why should I care about estate planning?
Because it will make your life easier later, by ensuring sound decisions on everything important have already been taken. You would have:
- Calculated the approximate value of your assets so as to know whether or not, your beneficiaries will pay capital gains taxes on their inheritance.
- Designated someone trustworthy to manage your estates profitably for you, in the event that something goes awry and you can’t manage them yourself.
- Determined who would care for your personal health, hygiene, and general welfare when you cannot anymore.
- Appointed someone trustworthy to care for your minor children and/or elderly parents if you become incapable of doing so.
- Decided in details, what happens to your assets after death? (Who gets what, when and how)
- Ensured your family is protected and provided for, after you are gone.
- Decided what happens to your remains after death. (Laid to rest – buried or scattered. You can plan your entire funeral in advance and take the burden off grieving family members.)
In the absence of timely estate planning, you rest these decisions in the hands of a judge, who may or may not be able to do justice to your estate. Estate planning will prevent you (or remaining family members) from facing any unhappy surprises and tight situations.
Are there any other benefits of estate planning?
Why yes there are! Estate planning, which in itself is a reasonably priced process, can help you save time and money by moving your estate quickly to beneficiaries. You will also be able to reduce total dollars spent on transferring property and assets, enabling you to leave behind more for them.
You can lend financial support to a cause of choice (social, political, medical, religious, or charitable) before or after your demise while enjoying tax benefits at the same time. Additionally, by designating an executor you trust to care for your business or to administer the entire process of property transfer, you can make life easier for surviving members.