Many people think that an estate plan is something that you only need to think about if you are old and wealthy. But the truth is that you don’t need to be particularly wealthy to benefit from estate planning. One reason that the wealthy benefit from the passage of wealth between generations is the fact that they put more effort into planning out the process so that as much money as possible goes on to their children.
You need a will. If you don’t have a will or a living trust of some sort, then it will be up to the local government to decide how your assets are divided. Depending on the state you live in your children may or may not get what you believe they owe.
Who will take care of your children if you die? This question is one of the best reasons for drawing up a will. If you don’t want to leave the question up to the government, then you should answer it yourself in the form of your will.
Who do you want to receive your assets? If you have specific people in mind, then you need to outline it in your will, especially if the beneficiaries you have in mind aren’t as obvious as your spouse or child. If you want your money to go to a charity after you die then you had better name it in the will.
There is also the question of who will serve as executor of your will. This is a big job! The executor needs to handle your debts before passing what’s left onto the people who deserve it. You need to choose your executor well; you need someone who is trustworthy and equipped with the necessary legal knowledge.
Handling an estate can be a lengthy process, and it only gets worse as every asset has to go through legal red tape. You can cut through a lot of red tape by creating a living trust. This document helps you divert assets away from the probate process, which is where assets are assessed by the legal system to make sure they are properly passed on. This sounds like a nice idea, but it can end up keeping your assets away from the people you want to give them to for months or even years.
A living trust allows you to efficiently transfer ownership of particular assets so that they don’t need to go through the probate process. The assets go to the trust, which is managed by a trustee that you choose. This is another role that you need to hand out carefully. It’s a big duty, but the right person can make all the difference.
No one wants to think about dying, but if you don’t think about what will happen afterward now, you can cause big problems for your family down the road. Save them all the trouble you can by taking the time to make plans for your estate now. They’ll thank you when the time comes. Think of it as one last gift to them.