5 Estate Planning Facts You Should Know
No matter your age, background, or wealth, estate planning applies to all of us. Life is anything but predictable, meaning we never know what’s going to come around the corner. So, should the worst happen to you, can you be certain that all your affairs are in order?
To help you prepare for the future and to assure your assets and wishes are well looked after, we’ve compiled our top selection of estate planning facts and myths. Here, we will explain why organising your affairs now will greatly benefit you and your loved ones in the long-run.
But first, we should explain what an estate plan actually is.
What is an Estate Plan?
Estate planning is the term used to describe how your final wishes will be carried out and how your assets will be divided upon your death. Thorough estate planning also covers you in the event you become incapacitated and can no longer manage your affairs personally.
There are many different forms of estate planning such as:
- Writing a will
- Setting up a trust
- Arranging a Lasting Power of Attorney (LPA)
Effective estate planning means looking at every avenue. It’s recommended that you speak to an expert to find out which path is the right one for you and your family.
Why is Estate Planning Important?
Estate planning ensures your last wishes are made clear to your loved ones — and to the courts who would otherwise appoint someone to manage your estate. It provides peace of mind and saves your family from having to guess what your final wishes would be, allowing them to grieve and give you the send off you deserve.
Understanding the current value of your assets will allow you to divide your wealth in a way that you deem fair. It also allows you to plan ahead for your own welfare. If you live for many more years, you need to ensure you have enough to get by and to appreciate your remaining time.
An organised estate can also save on taxes. Proactive planning helps you to navigate the tricky subject of inheritance tax, which ultimately ensures that your beneficiaries (the ones receiving your gifts) will be able to enjoy a greater amount. This means your legacy can go even farther after you are gone.
5 Estate Planning Facts You Should Know
When it comes to estate planning there are many facts not commonly known. Likewise, there are several estate planning myths that need to be dispelled. If you are beginning the process of estate planning, here are some top facts you should keep in mind:
1. There is No Minimum Age Limit
A popular misconception is that preparations only need to be made once you reach an older age. This couldn’t be further from the truth, as everyone has assets to their name and final wishes they want carried out.
As an example, an 18 year old may have a car, some money in the bank, a young child to care for, or even a business. Without a clear plan in place, their money may go to a sibling who the deceased didn’t want to provide for, their child may be placed into care, and their business could be dissolved.
Additionally, how you want your remains to be handled also forms a vital part of an estate plan, so it’s vital that all your wishes are officially recorded — no matter how old or young you may be.
2. All Your Assets Have Worth
The idea that you have nothing of value simply isn’t true, and is one of the major estate planning myths we are keen to dispel. Whether your possessions have monetary worth or sentimental value, someone you love will want to ensure that asset stays in the family.
Property, cash, and heirlooms are some of the more common parts of an estate that people divide among their loved ones, but other items can include:
- Personal possessions
- Social media accounts
- Downloads (such as films, books and games)
Everything has some level of worth, and thorough planning allows you to determine who should receive which asset.
3. Your Family Does Not Know All Your Final Wishes
While you may have discussed with your loved ones what you want to happen after you pass, it doesn’t mean that they know all your last wishes. For example, are you sure they will opt for burial or cremation? Is there a charity you wish to leave money to? What about your prized diamond ring — will that go to one of your children? And if so, which child does it go to?
One of the biggest estate planning myths is that everything will be fine even without some form of intervention. In truth, you need to leave a clear record of your wishes, so no stone is left unturned.
4. Your Family Will Dispute Unclear Terms
We’d love to list ‘Everything Will Work Itself Out’ at the top of our estate planning facts, but we would be lying if we did. It’s not that your loved ones are greedy or are looking out for themselves, but unclear terms can lead to arguments among your family.
Using our diamond ring example from earlier, can you be sure that one of your children would be happy for the other to inherit it if you don’t make a note of your wishes?
Everyone wants what is fair, so it is important that you document your final terms to ensure there can be no disputes. In turn, this will allow your loved ones to focus on grieving their loss rather than fighting over your possessions.
5. Your Loved Ones Cannot Make Decisions Without Your Documented Approval
When it comes to deciphering estate planning facts from fiction, one of the biggest and most commonly mistaken points surrounds your welfare and finances. Without any official legal right — such as a documented Lasting Power of Attorney — your family’s decisions in regards to your healthcare and money can be overruled by court-appointed officials.
For example, if you were in a coma, a doctor may have the last say in whether or not to switch off life support. Despite knowing your wishes, your family would be unable to prove what you want, meaning they may not be able to make the final decision on your behalf.
Your loved ones would be able to contest decisions, but that too adds to the stress, and there is no telling what the outcome may be.
Why Work with Just Wills and Legal Services When Developing Estate Plans
Just Wills & Legal Services specialise solely in estate planning in all of its forms. Our team has decades of experience between them, giving us the knowledge to help you navigate complex issues. Just as important, we understand that estate planning is a sensitive issue — as a result, we approach the subject with the care and attention it requires.
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