The Importance of Estate Planning in Four Simple Steps

It’s not something we like to talk about or consider but estate planning is very important if you own any assets and you want them to go to your loved ones. In fact, most of us spend far more time planning our holidays, buying a new car or choosing where to eat out!

It’s also a myth that estate planning is only for the rich. Without a plan in place, ensuring your affairs are in order when you pass away could have a long-lasting, and costly, impact on your loved ones, even if you have just a small house or some savings in the bank.

So, to help you understand why estate planning is crucial to ensure that you have a say in who inherits your assets, the team at Swansea Legal Solutions has come up with these four simple steps.

Step1 – Protecting Your Beneficiaries

Estate planning was once considered something that only high net worth individuals needed, but that’s now changed. These days most of us need to plan in case something happens to us so we can pass our assets onto our heirs. Even if you are only leaving behind a small estate, if you don’t decide who receives your property or other assets when you pass away , then you won’t have any control over what happens to it.

That’s because the main component of estate planning is identifying the heirs for your assets, Without an estate plan, the courts will often decide who gets your assets, a process that can take years, rack up fees, and cause stress and grief among your loved ones.

So, the first very important step is to ensure you have a properly written and signed will in place as, if you die intestate, then the courts will decide who gets your assets.

Step 2- Protecting Children

Nobody expects to die young, but if you’re the parent of small children, you need to prepare for the unthinkable. Again this is why a will I so important.

To ensure that your children are cared for in a manner of which you approve, you’ll want to name their guardians in the event that both parents die before the children turn 18. Without a will that names these guardians, the courts will step in to decide who will raise your children – and that could be not whom you would have chosen.

Step 3 – Planning for Inheritance Tax

Estate planning is all about protecting your loved ones, which means in part giving them protection from the huge, inheritance tax bills. Essential to estate planning is transferring assets to heirs before you pass away to create the smallest possible tax burden for them.

Even just a bit of estate planning can enable couples to reduce much or even all of their federal and state estate taxes and state inheritance taxes. There are also ways to decrease the income tax beneficiaries might have to pay. Without a plan, the amount that your heirs will owe Uncle Sam could be quite a lot.

Step 4 – Avoiding Family Conflict

We’ve all heard the horror stories. Someone with money dies and the war between family members begins. One sibling may think they deserve more than another, or another sibling may think they should be in charge of the finances even though they’re not named as an executor. Such squabbling can get ugly and end up in court, with family members pitted against one another.

Preventing this type of conflict is another reason why an estate plan is necessary. This will enable you to choose who controls your finances and assets if you become mentally incapacitated or after you die and will go a long way toward preventing unnecessary family conflict and ensuring that your assets are handled in the way that you intended.

It can also help you make individualised plans, if necessary such as making arrangements for a child with health problems or setting up a trust for those who may not be able to manage their finances themselves.

Like a will, it’s important to have in place an LPA (for both your health and welfare and your finances) by appointing attorneys to manage your assets and to make decisions should you not be able to do so yourself in the future.