The Importance of Effective Estate Planning
Long-term financial planning is complicated because there are so many variables at play. But that is, in part, why planning is so important: it is an attempt to establish some guidelines to manage your assets in the face of often unpredictable circumstances.
And in order to truly understand the estate planning, first you have to understand what it is.
What Is Estate Planning? An Overview
Simply put, The Rothenberg Group estate planning is just a collection of prepared tasks which will serve to manage a person’s assets in the event of their death or even in the event they are unable to manage them on their own.
Basically, the benefit of estate planning, for you, is that you develop a plan for your investments, savings accounts, and possessions should you pass away or become incapacitated in any way.
This includes the bequest of assets to heirs or third party entities (like charities) as well as the settlement of various taxes and other responsibilities.
Estate Planning: A Breakdown
When people talk about their “Last Will and testament” they often mean “estate planning” even though the will is only a small part of it. Estate planning actually involves several things:
- Creating a will
- Establishing a guardian—if necessary—for living dependents
- Making a database of the dependents and other beneficiaries
- setting up a fund and a person to organize
- Establishing annual gifting that can help to reduce taxes
- Establishing an executor for the estate who will oversee the will and settlement
It is extremely important that you understand tax management (or that you are able to hire a professional who understands tax management).
Why You Should Pursue Estate Planning?
Estate planning is a lot like insurance. It isn’t really much fun and you don’t truly get to appreciate its benefits until you need it.
However, without medical insurance you may end up paying an obscene amount of money for an emergency; and without auto insurance you could be paying to replace someone’s vehicle (not to mention medical expenses) in the event of an accident.
Similarly, nobody really gets to appreciate the benefits of estate planning until it comes time to manage the estate. And if you don’t have a plan in place your state will have a plan in place for you—but you will probably come to find it is not as attractive.
- If you pass away—without a plan—the state will distribute your assets according to probate laws. In most provinces, marriage determines that your assets go to your spouse and then children.
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Category: Family Finances
