Even though many know of family estate planning, they still neglect to actually set up one. Planning may not be fun and does not come with an immediate outcome as buying a car but it can save much of your time. However, estate planning may not be the perfect plan for everybody. Right now, let's figure out everything you need to know about family estate planning, reasons to buy or to avoid it.
What is Family Estate Planning?
In simple form, family estate planning is a series of documents that prove the existence of your assets and how to preserve, distribute them if you happen to pass away. The planning also works in the case where you become incapable.
An estate plan must include a will and a trust/ charitable donation. The will indicate who will inherit which asset and who will handle the process. If you have children who are still underage, by making a will, your children's custody will be placed in good hands. Other than that, your funeral preferences will also show on the will. The trust, on the other hand, controls when your assets are being handled. Moreover, trust or charity donation is said to be a good way to mitigate a large amount of taxes.
Besides the two usually seen documents of family estate planning, there are attorney’s power and healthcare power, letter of intent, beneficiary, and/or guardianship designation. An experienced attorney can aid your family estate planning setting up process.
Why is Estate Planning important?
Long before, an estate plan was considered something that only wealthy families owned. Nowadays, as the world is changing rapidly, many middle-class families have accumulated a great deal of assets that they want to pass on to the next generations. The right way to protect your loved ones after your death is through family estate planning.
First, family estate planning can protect your beneficiaries, young children, and the assets themselves.
If the main income of your family happens to pass away, if you do not have an advanced plan then the assets will fall out of your control. And guess what, the court will stand in and make a decision of your assets’ fate. This period is often long and requires many legal documents and fees. The outcome may be that your assets fall into the wrong hands, not your beneficiaries. In all, the process can leave quite ugly consequences. Remember that the main purpose of family estate planning is to designate beneficiaries to your assets, whether the amount is large or small.
The same goes to your young children's custody. If you do not put up a will naming a trustful guardian for your under 18 kids, the court will be the one in charge.
Second, an estate plan can keep you out of probate. Yes, it is. You can avoid the legal process of proving the rightness of your will. As it includes legal works, and those works tend to be horrific in the majority of minds, many want to bypass the probate. And setting up estate planning is one of the ways to do it.
Third, as mentioned above, a trust or charity donation in an estate plan can save a big tax burden. You sure want to transfer your assets to the right beneficiaries without pressing them down with huge tax burdens, from federal to state tax, and also the income tax, the money will be huge. Creating family estate planning is a great way to solve it.
Last but not least, with the existence of family estate planning, your family can avoid unwanted quarrels and keep a peaceful relationship. Keep your family away from the big mess of fighting assets, some may even result in court, you may consider an estate plan early. Equally divided is a wise choice, especially for remarried families. However, you may consider leaving a big part to children with diseases or whoever took well care of your last years.
Why is Family Estate Planning avoided?
The main reason why people tend to avoid family estate planning maybe because of fall assumptions. For example, like it is too old, only old married couples have to think of planning; second, it is a jinx talking about death, third, your children consist of one, so there will be no asset fighting, fourth, the planning is too out of your pocket. Many as it must be, these reasons will not keep you from the actual planning.
Family estate planning is not entirely setting up a will and a trust. It is not only tailor-made for wealthy people. A well-done estate plan can help your finances and assets be taken care of and avoid unwanted court-involved situations.
For more Canada Estate Planning advice and guide, please refer to us at Best Insurance Online.
