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What is Estate Planning?
Your estate is everything you own, this includes your home; bank accounts, investments, personal effects, your car, everything! No matter how large or small everything you own contributes to your estate. As you can’t take anything with you when you die, it’s important you plan for what happens to your estate when you pass away. You have absolute control over your estate whilst you are alive and you have the right to decide what happens to your estate following your death. Failure to plan properly can mean your estate is not distributed in line with your wishes. It is natural to assume that when you pass your estate on to your loved ones you will want this to be done in the most tax-efficient fashion possible.
There is of course much more to estate planning than just deciding where your assets go after you pass. Good estate planning should also include instructions for your care if you become unable to look after yourself towards then end of your life. It is important you also name a legal guardian for your children if they are legally not adults yet, if they will require enhanced protection in adulthood due to learning difficulties, or for those who might not be deemed financially responsible. You should also look to include what happens to anything for which you are directly responsible, for example, your business.
Estate planning should when necessary include life insurance. This is in place to cover your family’s needs in the event of your death or any outstanding liabilities you may have for example your mortgage. There are several options available for this, please consult a specialist who can explain the most suitable solutions available.
The importance of a will
In order to ensure all of the above is fulfilled in the most seamless fashion possible the best place to start is by creating a last will and testament. This is a legal document which will distribute your estate in accordance with your wishes. You should consult your financial advisor for assistance in will creation and estate planning. The earlier you can organise this, the better. Death unfortunately, happens to people of all ages, so it’s important whatever age you are within adulthood you undertake estate planning. Estate planning really is something which should not be delayed. When the worst does happen, it is not fair to expect your family to pick up the pieces due to you not taking the time to plan.
Who should think about estate planning?
There is a common misconception that estate planning is exclusively an activity for the wealthiest within society. Whilst it is important for those with wealth to undertake this process, it is perhaps, equally, if not more important for those with minimal wealth to plan this. Families who barely make ends meet are likely those affected worst in times of tragedy. As such, estate planning through trusts, wills and life insurance are of paramount importance.
The basic purpose of a will is to give you the power to decide what happens to your assets when you’re gone. If you don’t exercise that right, you will lose it and potentially cause major issues for your loved ones after your passing. Please contact your financial advisor to begin the estate planning process.
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