The quarrel to inherit the legacy of elderly people has historically been a contentious issue. Several movies have portrayed the issue of legacy/estate planning as well. It’s true to some extent, but estate planning goes beyond this! This is a necessary step to ensure that things run smoothly for your family in your absence.
Think about those assets and investments that you have worked hard to build throughout your life. What would happen to these assets or investments if you suddenly passed away? What if these assets/investments fall into the wrong hands? Is your charity going to continue to thrive as it did when you were around? In this legacy planning guide, you will learn how important it is to leave a legacy that will be carried on after you. Furthermore, you will discover why legacy planning is a crucial aspect of financial planning.
What is Legacy Planning?
The purpose of legacy planning is to make sure that your assets/investments go to the right people. You should focus on making sure that your wishes and family values are well documented and understood by your heirs and passed along with your wealth. In estate planning, you specify how you want your assets and properties to be passed down among your family members. This is a very important document as it pens down your wishes and specifies who will safeguard those wishes after you are no longer there!
In most cases, people associate estate planning with the writing of wills, owning large properties, or being extraordinarily wealthy. Basically, it’s just a love gesture that you make after you pass away for your loved ones. This could encompass anything from properties to cars, money to other assets, or anything you own. If you fail to make estate planning decisions while alive and able, then the state law & probate court will. Thus, the disadvantage of State Law & Probate Court is that their decisions may not be in harmony with your or your family’s desires.
Importance of legacy planning
A legacy plan is pivotal in preventing disputes and complications among your family members. There are, however, other benefits as well. By contemplating your legacy and creating a plan, you can shape the destiny of your hard-earned wealth so that it provides all the benefits you want your heirs to enjoy and gives you peace of mind.:
- Plan how and when your assets will be distributed so that the wealth transfer process does not occur according to your wishes.
- Redesignate beneficiaries as necessary.
- Minimize taxes.
- Provide guardianship and care for children and family members, young and old, with special needs.
- Make sure your family members are financially secure in the event of your death or illness.
- The execution of your wishes will be carried out on your behalf if you are not able to do so.
- Peaceful succession & disposition of the estate
How to undertake estate planning?
There is a general assumption that only a ‘Will’ is required for estate planning. However, this is not true. The essential components of an Estate Plan include the following:
WILL:
This helps in the identification of who you would want to get your assets or become the guardian of your children or become an executor to oversee the whole estate plan process after them.
POWER OF ATTORNEY:
This is a trusted person who makes financial decisions when you become incapacitated. They even pay your bills, manage your investments, and make legal & business decisions.
HEALTH CARE DIRECTIVES:
Their function is similar to power of attorney, the only difference is that here, healthcare directives make all the medical decisions.
TRUSTS:
They have control over how and when your assets are distributed and they even reduce or eliminate estate taxes.
BENEFICIARY DESIGNATIONS:
These are found on retirement accounts and insurance policies. They decide who will receive the benefits when you are not there. They make it essential that you review your designations at least once a year.
Myths of estate planning to ignore
Myths are created by assumptions people make! Estate planning also became the victim of these myths. However, it’s time to bust these myths:
1. Estate planning is only meant for the rich
You don’t have to be wealthy to do estate planning. It is not necessary to have a certain bank balance or valuables to undertake this. It is simply passing any of your assets to your loved ones, as a gesture of love!
2. My legal heirs will handle it maturely
Well, you can hope they do. However, in today’s world where practicality is weighed more, disputes are somehow bound to happen. It is your responsibility to make segregation of your assets among your legal heirs, rightfully!
3. I will do estate planning after my retirement
The pandemic has made us believe that is how life is so much unpredictable. The earlier you plan for this, the better it will be for you & your loved ones.
4. I don’t have legal support for filing for a will
The good news is that you don’t need one. A will by an individual can be made many times, but the valid one would be the latest & signed by the witnesses. Thus, this will be regarded as the final Will for all asset transfers, therefore all the previous Wills will be regarded as null and void in the eyes of the law. When creating a will all by yourself make sure to get it signed by two witnesses.
How will a financial planner help in estate planning?
Without proper guidance, you may make a number of mistakes when it comes to financial and estate planning. An estate plan that is well-drafted and comprehensive can safeguard your financial security while you are alive and protect your family financially after you die. Don’t hesitate to contact a professional financial advisor if you are planning for a secure and comfortable financial future. With the help of a financial planner, you can get done the following things mentioned below-
- Calculate your worth by creating a list of all of your financial assets, personal property, document liabilities, etc.
- Ask a financial planner to refer you to a qualified estate planning attorney
- Determine (or update) your beneficiaries
- Revisit your estate plan regularly
Bottom Line:
By taking the right steps today, you can preserve the financial security of yourself and your family for a lifetime. Let your legacy, your estate go in the right direction with the right person. Professional help from financial advisors will give you the right direction.
