Planning for the future of your estate can be a complicated process, especially if you own a lot of assets or property. The various options as far as distribution of your assets and how to go about creating the necessary legal structures and documentation to ensure this gets handled can be a real pain too.
No one enjoys looking forward to death and the estate planning that goes along with handling the proceedings thereof, but it’s the responsible thing to do. Failing to plan for your own passing, whether you’re married or single, can be something that comes to the detriment of your family as a result of insufficient preparation.
Planning for your estate is a very important part of making not only the grieving process easier, but of staying out of the courthouse too. The clearer and more concise your estate plan is, the less legal mediation needed, and the less stress on everyone involved.
Estate planning is essentially critical for those who are property owners in their later years, and there’s some good reasons for that classification too. Here’s why estate planning is critical for property owners:
Stress Reduction Via Preparedness
Why is it important to have an estate plan? While it’s true that the law does not require you to have one, having an already drawn-out estate plan can take a great amount of stress and responsibility off of your heirs after your passing, or potentially yours as well if you end up scrambling to prepare one in your later years.
Leaving your children and grandchildren, or other branches of the family tree as well, to decipher what to do with what, who to give this, who gets this money, and so on and so forth, can be a tiring process that your family wouldn’t otherwise have to deal with had it been prepared already with your estate planner.
Things like this can also cause family disputes and break bonds too. This is especially true for property owners, because your estate is likely to have a higher value than that of a non-property owner, and the liquidity that may come from this is something that can present a problem if it hasn’t been designated previously. Disagreements over money are one of the most common arguments to come between families, and something you’ll want to avoid at all costs.
Minimizing Your Family’s Tax Liability
Having a set of plans for your family or for yourself can help minimize your tax liability and protect your assets from any possible litigation that may occur when your assets become too large for you. If you’re someone who doesn’t spend much time thinking about their own estate, you may not understand just how important it is to have a plan for any corresponding or relevant taxes.
Now, not all estates are going to be subject to taxes of course. Traditionally, unless your estate is valued at more than USD$11 million, you won’t be subject to any federal taxes. States on the other hand, adopt their own individual taxation levels for estates, so it’s important to research this as a property owner. If you take the time to look into which states have inheritance tax and what exactly you may be subject to, you’ll be far less likely to make decisions that could potentially damage or even eliminate your chances at financial security.
Setting Your Family Up For The Future
If you’re reading this as a property owner, you’ve probably got some assets behind your name. This will all go to someone, and depending upon how much property you own, it can end up being life-changing for your family and their future. This all comes down to your ability to plan accordingly, though.
Having a decent sized estate doesn’t help as much if you fail to plan for the taxes that may come by taking advantages of certain tax breaks such as giving monetary gifts, setting up a trust, or maybe even financing a startup business that has the potential to become profitable in the legal form of a family limited partnership. The options are abundant.
You want to make sure your heirs reap the most benefits possible from your passing, including the wealth you’ve built throughout your life and the liquidity found in the values of your property. This may even mean selling off some early and taking the tax hit yourself, reinvesting it into a tax advantaged account, or finding some other means of keeping the burden off of your children and grandchildren.
Mitigation Of Debt And Financial Obligations
When you pass away and your assets or financial accounts are passed down to your heirs, any outstanding debts cannot be collected from that inheritance. However, they can most definitely be collected from your estate value if necessary, which comes before your heirs get their inheritance from it.
Leaving outstanding balances on properties or other loans can leave your heirs in a conundrum when it comes to figuring out how to execute your estate. What needs to be paid? When will they take it? Is there enough in the bank account? Will they need to sell the house? All of these unanswerable questions may come up at first when outstanding debts arise.
How to go about ridding yourself of these financial burdens and how they’ll be paid off from your estate value are some of the biggest decisions that you’ll have to make. Having a good estate plan though will allow your loved ones to deal with the situation more easily, while ensuring that you receive the proper financial support that you’ll need to pay your mortgage, medical bills, and other essentials over the long run.
As you shift into the latter stages of your life, you may begin to realize that it’s no longer so much about you as much as it is about those you’re leaving behind. Having an estate plan for your property is best for all of them, and sets them up well for the future.
Taking the time to make this plan is something that they’ll undoubtedly appreciate when that tough day comes, and something that can potentially benefit them for generations.