There is one part of life that everyone shares in common but do not talk about enough – death. When you die, there is no way of bringing what you own along with you. Therefore, there are existing legal and financial services that everyone should have at least a basic understanding of. Estate planning is the process that enables you to minimise estate administration difficulties and maximise the value of your estate, to the people you want to leave it to.
Myth No. 1 ~ I Don’t Have An Estate. Estate Planning Does Not Apply To Me
A lot of people do not realise that they do have an estate. It is a term that encompasses everything you own – whether it be property, car, savings account, investments, or even personal items. Having control over how you want all your assets to be managed when you pass away is always much easier than leaving without any plans. Additionally, a good estate plan will allow you to predict and manage the legal fees and taxes involved, and cut costs down to a minimum.
Myth No. 2 ~ It Is Only For The Rich
Estate planning applies to almost everyone. It can be a very lengthy process and incur additional time and expenses if there is no will involved. This will create inconvenience, more so for those who are in low-income groups. It is ideal for those who do not want to lose more assets. If you die without a will, your assets may be distributed according to the laws in your state or country. This may not be favourable if you do not agree with the arrangements of existing probate laws. Furthermore, estate planning does not have to be expensive. You can arrange one that suits your current needs and expand it when you have more income to do so.
Myth No. 3 ~ My Family Will Take Care Of Things When I Die
Does your family know where all your financial records are? If you have more than one marriage, are there ways of distributing assets that your partner is not very clear about? It can be a huge hassle for family members to locate all the necessary documents after the family member dies. Family members will also have to appoint an attorney, which increases the waiting time before inheriting any assets. In many cases, family members cannot come to an agreement on how to distribute the assets. To avoid unnecessary conflicts, it is best to start organising your records and get an estate plan started.
Myth No. 4 ~ I Need To Focus On Living, Not Talk About Death
Death is often a hushed up topic but we should not avoid it. Families who discuss how to prepare before a loved one’s death are more likely to cope better in future. It would not be preferable for families to deal with financial matters when they are grieving later on. While people tend to think more about estate plans when they get older, we should bear in mind that we may not be able to predict accurately when we are going to die. If accidents and sudden illnesses occur, a lot of inconveniences can stack up without proper estate planning.
How To Start Proper Estate Planning
There are many tools you can use to have a secure estate plan. To note, there is a lot more than dividing up assets to people in your life. Popular components typically included in an estate plan are :
i) Will – A document that takes effect after the individual is deceased. This document provides instructions for the executor, and distributes property according to the deceased’s wishes.
ii) Living Trust – Unlike a will, this document can take effect immediately after creation. It can avoid possibly time-consuming legal procedures and also provide tax savings if there is a substantial amount involved.
iii) Beneficiary Designation – Beneficiaries or contingent beneficiaries can be named outside of a will through life insurance or retirement plans. Beneficiaries should be above the age of 21 and be mentally sound in order to avoid court challenges.
iv) Guardianship Designation – This document is to designate a guardian for minors. This will enable the minors to be placed under the care of a person deemed responsible by the deceased.
v) Letter Of Intent – This letter should contain anything that does not belong in a will such as personal requests or funeral preferences.
If you have not set up an estate plan, the next best time to do it is now. You can at the very least start with making a will. At the end of the day, you will be able to share peace of mind between yourself and your family members – there is no better gift.
The above information was shared by Amanda Lim, an experienced senior estate planner, and cross-checked with reliable platforms. You can contact Amanda Lim at 013-931 8687 on how to best personalise an estate plan according to your needs.
You can also read Amanda Lim’s story on how she achieves first time career success here.