Many individuals typically believe that only the rich should engage in estate planning. This is not the case. Everyone should participate in estate planning, regardless of their age or property value. This is because an estate includes items like furniture, life insurance, jewels, other valuables, and opulent residences and other pricey investments. But what exactly is “estate planning,” and why is it so important? Let’s investigate.
What is estate planning?
In its simplest form, estate planning is the process of making the necessary arrangements to distribute one’s assets (the “estate”) in the event of death or incapacitation. Your possessions include your home, car[s], bank accounts, life insurance policy, furniture, investments, and any jewelry you may have.
You can choose how your assets will be divided among your loved ones by putting a Will or other estate planning in place. As a result, if you don’t have it, you won’t be able to decide who gets your property. The plan will arrange your company and create a record of your future goals and desires. You can create an estate plan with the help of a power of attorney.
Let’s examine a few reasons why estate planning is important.
- You can choose who will receive your property as an inheritance.
Choosing who will receive your assets and money after your death is one of the most crucial elements of creating an estate plan. Your possessions will be distributed according to the directions you’ve left behind if you’re not around. A judge will decide the division of your property if you don’t have a Will or other estate planning in place. Naturally, if someone who isn’t supposed to inherit your property manages to get their hands on it, it may get rather ugly and result in a succession dispute.
- It guarantees your small children’s security
When you have small children, making sure they won’t face financial difficulty if you aren’t there should be one of your top priorities. Death is inevitable and it can happen at any time. What happens afterward? If you have young children, you must be ready for a catastrophe of this magnitude. Making a Will, a crucial element of estate planning, is one of the best ways to prepare for such a situation. If your children are still minors and can’t take care of themselves, you can designate a guardian in your Will. If you don’t accede to that demand, the court will name a guardian to look after your kids.
- To avoid a probate
A person is said to have died “intestate” if they don’t leave a Will behind after they pass away. If you pass away intestate in such a case, the laws of your state will determine who receives what property and how it is distributed. A representative appointed by the court will manage the distribution of your assets. However, if you have a power of attorney, you can select your estate executor as you prepare your Will.