We see estate planning as something that only applies to end of life, so collectively, we tend to procrastinate it. But realistically, the earlier you start estate planning, the better. When is the right time to start estate planning and what should your biggest priorities be?
What Is Estate Planning?
Estate planning is the practice of making arrangements for your property (and your life and health) in the event of your death or declining health. While your individual needs may vary, most types of estate planning include the following:
Asset planning. First, you’ll focus on asset planning, deciding how you want your property to be inherited in the event of your death. This includes real estate, cash holdings, alternative investments, and everything in between.
Instructions for care. You’ll also need to create plans for your care, in the event that you are no longer able to express your wishes directly. For example, establishing power of attorney can give important people in your life the power to make decisions on your behalf if you’re rendered unable to speak.
Business transfers. If you own a business, estate planning can help you plan transfers. In other words, who is going to run the business when you’re no longer able to?
Child guardianship. If you have children, estate planning can give you a path to your preferred child guardianship. Who is going to take care of your children after you’re gone?
Tax and fee minimization. Estate taxes force recipients of inherited property to pay taxes on receipts above a certain amount. Depending on how you arrange your estate planning, recipients may also be responsible for specific taxes, fees, and other penalties. Estate planning is also about minimizing these financial burdens.
The Benefits of Estate Planning
There are several benefits of estate planning.
Clear, legally established plans. This is a way of formalizing your wishes and making sure that your property is handled responsibly. This is especially important if you fear that family members are going to fight over your property, if certain family members are not legally or financially responsible, or if your estate is especially complicated.
Family member protection and security. Estate planning is about your family members and loved ones. With a thorough approach to estate planning, you can make sure that all the important people in your life are adequately protected.
Cost reduction. Taxes, fees, and other costs can quickly add up if you’re not careful. Proper estate planning keeps these extra expenses at bay.
Peace of mind. Many people pursue estate planning just so they can rest comfortably. Knowing that your family is protected is invaluable.
Does Everyone Need Estate Planning?
Does everyone need estate planning?
Technically, no. But estate planning isn’t just for the ultra-wealthy. If you have any property, and loved ones to protect, you can probably benefit from estate planning. Even if you don’t have any property, it may be worth orchestrating plans for a potential decline in your health.
Still, if you don’t have any property, if you’re heavily in debt, if you don’t have any close relatives or loved ones, and if you don’t particularly care what happens to you after a major health event, estate planning may not help you.
Why You Should Start Estate Planning as Soon as Possible
If you do think you’ll benefit from estate planning, it pays to start planning as soon as possible.
These are just a few of the reasons why:
Almost everyone has assets. As we indicated, almost everyone has assets to plan for. Even if you don’t consider yourself wealthy, you may have a business, sentimental items you want to pass on, or family heirlooms that need to be divided.
Death is unpredictable. Death can come at any time. You could suffer a brain aneurysm, at any age, with no warning signs, and with no preexisting risk factors – or you could be involved in a traffic accident that you never see coming. Because of this, you can’t afford to wait to plan your estate; estate planning isn’t just for the elderly or infirm.
Estate planning is relatively inexpensive. Some people are reluctant to pursue estate planning because they imagine it to be expensive, but most lawyers charge a reasonable rate. Considering you stand to save money in terms of taxes and fees, this service might even pay for itself.
Plans can be changed. Finally, remember that your plans can be changed. If your circumstances change, or if you change your mind, you can update your estate plan accordingly.
It’s time to stop procrastinating. If you or your family members stand to benefit from estate planning, you should contact a lawyer as soon as possible. You’ll be glad you did.
