Why should I create a will? I am going to live a long and happy life. Well, most people should get their wills written while they are still healthy and very much able to comprehend what clauses and terms should go into that document.
In simple terms, a will is a testament / legal document created to coordinate the distribution of all of the testator’s assets. It is executed in the event of their passing. Following this, all the assets are handed over / distributed among the appointed guardians and/or children/beneficiaries.
You must draft a will because it is not only a practical instrument to ensure fair distribution of your property and assets but it also facilitates the following:
You can name any individual as an executor of your estate to wrap up all the formalities of distribution post your passing
It also allows you to name any guardians for your children and the property that they are going to inherit
Create trusts for your children or any other young beneficiaries you might have
You may also choose to forgive any debts
When it comes to drafting a will, you often forget that it is only a small aspect of a bigger scheme of things.
Yes, we are talking about creating an estate plan which is a wider and all-encompassing activity that you should participate in actively.
Estate Planning – A Simple Definition To Wrap Your Head Around
If we put it in the simplest words, estate planning is about protecting your assets and your loved ones with one masterstroke. It is the process of planning your succession efficiently and managing your financial affairs and assets even after you have passed. An estate plan helps you manage all your assets, properties, personal belongings, real estate holdings, and all of your wealth during and beyond your lifetime.
It clearly states what part of your wealth/property is going to be inherited by whom. You can leave behind instructions on how to manage and distribute your wealth and assets among your beneficiaries in an estate plan that you create.
The following reasons will shed more light on what an estate plan is and why you should invest your time and resources into creating one right now.
1. Choose Your Nominees Wisely
You are always going to have something that you would want to leave behind for your beneficiaries when you pass away. You want to make this choice carefully. If you have:
Any stock portfolios
A vacation home
Real estate investments
Bonds or debentures in your name
You can always choose who is going to inherit what from you by planning for your estate in good time.
2. Cancel And Override Pre-Written Will
Timely real estate planning allows you to override any prewritten will that you may have in your name. A timely estate plan ensures the following:
Execute a 100% valid will all by yourself
Create a revocable trust in which your assets could be transferred while you still live
Own your assets either jointly or provide for a disposition as you deem fit
There will be both pros and cons to every option that you pick. To arrive at a practical conclusion, do not hesitate from getting in touch with your Estate Planning Attorney.
3. Protect Your Children
Every parent thinks first and foremost about their children. You are worried about what will happen to your kids after you are gone.
Setting up a will for their benefit is only a part of an estate plan. You can decide who will become the guardian of your children in the event of your passing.
Your will is going to contain the necessary provisions to maintain their wellbeing for as long as it is required or till the age of 18.
4. Safeguard Adult Beneficiaries
A reliable and solid estate plan could also benefit all the adult beneficiaries in your will.
As a parent, it is your responsibility to protect your children from any outside influences, unfair litigation, and creditor-related issues. By creating a timely estate plan, you can ensure that nobody takes undue advantage of the grownups in your family.
5. Choose A Conservator
It is not only about naming a guardian for your children but also appointing a conservator if you need one. This individual is going to manage all your assets. These are the very same possessions that your heirs are going to inherit sooner or later.
You will leave the necessary instructions that are to be followed with the conservator to maintain the integrity and value of your assets. He will be responsible for creating trust and distributing assets to your beneficiaries in the event of your passing.
6. Avoid Huge Taxes
Who wants to end up paying huge taxes? Nobody.
This is one of the most practical reasons to set up an estate plan right now. If you’re not careful while creating an estate plan, these taxes could drain all the finances of your beneficiaries.
You should be able to transfer your assets to your heirs, all the while ensuring that the tax burden is as minimal as possible.
7. Avoid Probate
If you want to make sure that your property or estate does not go to probate, draft an estate plan right away.
By definition, probate is a process that is supervised by the court to authenticate your will and assess the value of your assets. The probate will pay off any of your remaining bills and taxes and then distribute the leftover assets in your name among your beneficiaries / rightful heirs.
This is not as simple as it sounds because a typical probate process could take a significant amount of time to complete. Even if you have a simple will, that is not going to be enough to avoid probate. You must have an estate plan ready for this contingency of sorts.
There are many more reasons to formulate an estate plan right away. You can:
Protect your beneficiaries from any unforeseen creditors
Decide who is going to take healthcare decisions for you
Restrict your children’s access to their inheritance temporarily
Provide a safe and loving dwelling for your pets
Manage your digital assets and avoid family disputes as well
Phew! I think those were enough reasons to start planning for your estate right now.
Thanks for reading, please let me know your thoughts and comments below.
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Sagar Sridhar is a personal finance blogger from Canada. His genuine passion for personal finance coupled with his unique style of writing is what stands out. Professionally, he is a computer engineer, agile certified and has a master’s degree in Project Management. His writing has been featured or quoted in the leading Canadian publications such as Credit Canada and many other personal finance publications. While he is juggling between his day job and blogging, he is the main author on this blog and has miles to go before making the final pit stop.