Craft Your Legacy: The Importance of Effective Estate Planning
One of the biggest misconceptions about estate planning is that it is for the wealthy, the elderly, the sick, or the dying. Another misconception is that it is complex and costly. Spoiler Alert: Estate planning is for everyone! And if you think estate planning is morbid or costly, wait until you hear about the cost of not planning (medical wishes not being honored, loss of control, family disputes, assets being distributed inconsistent with your wishes) then add taxes, attorney fees and probate costs to that… Are you starting to get the picture yet?
Understanding and dispelling some of these misconceptions can encourage more individuals to be proactive, ensuring a better quality of life, financial security, and a means for wealth transference.
Before we dive into why estate planning is so important and why starting early matters, we need to understand what estate planning is in its simplest form as to remove the eerie, mortal stigma associated with it. Estate planning is the term used to describe the two-prong process of planning for incapacity by naming persons who are authorized to make medical and financial decisions when one cannot manage his/her affair and for addressing who inherits assets at one’s death. See, not that bad!
In fact, a well-thought-out estate plan contains serval components and covers various considerations: health, personal finances, business succession planning, asset protection, legacy planning, special needs planning, philanthropy, probate avoidance, and dare I say taxes?!
Let’s break it down, in no particular order:
Healthcare Proxies: Used for naming the person(s) you want to make medical decisions for you and gives your doctor end-of-life instructions;
General Power of Attorney: Used for naming the person(s) you want to handle your financial matters such as banking and paying bills;
Last Will and Testament: Used to nominate the executor to your estate and details the distribution of your assets at your death. It also accounts for your biggest asset(s), your minor children, by nominating guardians for them;
Trust: Used for various purposes such as providing more control over how assets are distributed at your death (because we all love control), making distribution to persons with disabilities without jeopardizing government benefits, avoiding probate (note: probate is not always the devil it is perceived to be), and minimize taxes, to name a few;
Deeds: To deed or not to deed? Your estate planning addresses how your home or other real estate property will be passed to your beneficiaries;
Business Succession Planning: Used to ensure business ventures are set up for continued success by way of planning for future ownership and management;
Asset protection planning: Used for wealth building and wealth transference;
Long-term care planning: Used to ensure your care wishes are carried out (because 100% of my clients want to grow old in the comforts of their homes); and
Philanthropy and legacy planning: Used to incorporate your values, beliefs, and principles and ensure they are passed on to future generations;
Do I really need to continue?
Hopefully by now you are beginning to understand that estate planning plays a crucial role in all parts of our lives and in providing overall peace of mind when it comes to quality of life, financial security, and preserving family legacy.
There you have it, clean, quick, and easy. Estate planning does not have to be confusing and scary but if you still have questions, Sarringhaus & Scott Co., LPA can help.
