Anyone can admit that raising kids is not an easy task. From assisting your children to do their homework to planning dinner each day, your schedule is tight! With all the pressure consuming your time, the last thing that comes to your mind is estate planning for your children’s future.
The reality is when you are young you think less about end-of-life issues like estate planning. But many of us don’t know that it is also important. When you don’t have an estate plan, you have less control over how your wealth and assets are divided.
Once you have kids of your own, assuring their future will be your top priority. One of the best ways is to make a plan on how, when, and to whom you split up your estate. When you grow older you can adjust your will accordingly.
So what exactly is an estate planning and how does it work? Let us dive deeper to know more.
Who needs Estate Planning?
Every one of us needs estate planning. The term “estate” can be a little confusing, though. Many people presume that only the wealthy should have an estate, but it can’t be further from the truth.
Your estate includes everything you own, from your home, car, and any other assets you have.
If you don’t take care of your estate planning, then you have to leave it up to your state’s court to do it for you. You risk costing your family a lot of time and money by leaving matters into the court’s hands.
Last Will & Testament
A will, or testament, is where you declare your final desires regarding your property. Once you die, your will dies with you, and every property titled to your name in that will from personal valuables to your business must go through probate court.
This process can take anywhere from nine months to two years (or even longer).
To reduce the costs and time probate takes, you should cover as much as possible in your last will.
Here is a detailed list of what you have to include in your will:
Executor: A person or company that you appoint to ensure that your wishes are honored and executed in writing.
Beneficiary: The person who inherits your property.
Personal Property: The properties which are listed in your will to whom they should be distributed.
Business Property: The business assets under your name are usually listed separately from others.
Move Your Home To Your Children
You can still live in your home when you sell it to your children. For that, you need to sell your home at fair market value, or otherwise, it could be considered as a gift, which has its tax implications.
You can also lend to your children so they can buy your home. If you go this route, then you’re legally required to charge interest, which you can use as an income.
To Sum Up
Estate planning is a complex process as it requires you to think about your possessions in a new light. Initiate your planning as soon as possible, so that you can be much better in the future. If you need estate planning services contact Ethica.