No financial plan can be considered complete without consideration of planning your estate. A comprehensive financial plan is one which includes wealth accumulation, wealth preservation and lastly wealth distribution.
Estate planning involves wealth preservation and wealth distribution, or in simple language, it is the compilation of a person’s assets and liabilities and the steps taken to ensure the transfer and control of assets are managed to maximize the benefits to the deceased’s estates and beneficiaries, i.e. family. Contrary to what most people believe, estate planning is not just about the writing of a will, although it is a very important part of the process. Besides a well crafted will, a comprehensive estate planning process should also include objectives such as protecting assets from creditors, ensuring business continuity and canceling personal guarantee ship that cannot be achieved with just a will alone.
An estate plan therefore should also include an assignment of power of attorney, a health care proxy and a trust. The assignment of the power of attorney gives someone you trust the ability to manage your financial affairs and make decision on your behalf, while a health care proxy, or medical power of attorney, gives someone the power to make decisions about your medical condition if you're unable to do so. A trust is another way of passing on money and other assets to heirs. In many ways trusts are more hassle-free than wills. They don't have to be processed in court, and therefore, avoid many costs and delays. They also get around some of the high taxes that can be attached to an inheritance.
Like the saying goes, only two things are certain in life, i.e. death and taxes. The scariest scenario for your beneficiaries would be if under unforeseen circumstances, they are left without a will and the distribution of your assets has to be decided by the courts. A well written will ensure that if anything should happen to you, your family will be taken care of in precisely the way you have determine. Your family will also not have to undergo the agony, delays and difficulties of the legal procedures at the courts in seeking their inheritance. The sad truth of the matter however, is that there are many people who do not have a will let alone practice estate planning.
One reason why many people had failed to include estate planning in the financial plan could be attributed to the reason that discussing death is a taboo to these people. Other reasons could be their misconception that estate planning is only for the rich or for the older folks. They may also be thinking that engaging estate planner would be expensive or that buying the correct amount of insurance would be sufficient.
The importance of estate planning cannot be emphasized enough for everyone who cares about his family. For a person without much assets, having a will is crucial so that their assets can be immediately distributed to their loved ones upon their. The children of older couples may already be financially stable and therefore are less likely to suffer if their parents did not plan their estate, whereas for the children of younger couples are still very much dependent on the assets left behind. Hence, the estate planning process should be done as early as possible and not be delayed till old age.