What is it?
Estate planning is the preparation of tasks that serve to manage an individual’s asset base in the event of their incapacitation or death. The planning includes the bequest of assets to heirs and the settlement of estate taxes. Most estate plans are set up with the help of an attorney experienced in estate law.
What are the Fundamental Questions?
Irrespective of religious inclinations, Estate Planning is considered an imperative for everyone. Even so, many people still shy away from discussing the subject matter because the general feeling is that discussing Estate Planning is equivalent to discussing death. While we cannot ignore this emotional concern especially understanding that the loss of a loved one can be very traumatic, in-fighting between family members, legal problems or delays which could further aggravate already tense circumstances.
Who takes charge of your assets?
For married couples, the specific traditions and laws of your state, which are designed to protect a surviving spouse, is an important issue to contemplate before you finalise your Estate Plan. Once you have addressed this you then need to consider the following:
• How should your assets be distributed among your children?
• Do you wish to include grandchildren or others as beneficiaries?
• Would you like to share your wealth with charity?
• What are each beneficiaries’ cash flow needs?
For unmarried individuals, with a live-in partner, other relatives, close friends or a favourite charity in mind, dying without a proper Estate Plan means that your wishes, as they relate to the above-mentioned individuals will not be respected. Instead, state law will divide up your assets in a best-fit manner, potentially benefiting parents, siblings – or even distant relations whom you may never have met.
Whether you are married or unmarried, in many instances, a handwritten Will is not legally binding if it does not comply with the requirements of the Wills Act of the relevant state. A list directing special keepsakes to designated beneficiaries will be ignored, unless it is referenced or incorporated in a proper Estate Planning document.
Which assets are you bequeathing?
When transferring certain categories of assets, you may need to answer some questions:
• Do you want your children to run your business(es)?
• Who should asset-ownership reside with?
• What other assets do you want to give your children?
• If you own rental properties, should all beneficiaries receive them?
• Are your children capable of managing properties?
When and to whom should you transfer your wealth?
Three factors naturally determine when and how your beneficiaries should receive your assets. These three factors are:
• The age and maturity of beneficiaries
• The size of your Estate versus your need for cash flow during your lifetime
• The tax implications
Who should be the guardian of your children?
If you have minor or disabled children, perhaps the most important element of your Estate Plan is not about your wealth, but rather the person or institution that will act as your children’s guardian. While the physical and emotional security of your children are important, there are also financial priorities to consider.
Considerations for selecting a guardian for your children
Will the guardian be capable of managing your children’s assets?
• Should the guardian receive compensation?
• Will the guardian’s home accommodate your children?
• What standard of living is appropriate for your children, given their assets and prior life experiences, and can the guardian provide this?
If you prefer, you can name separate guardians for your children and their assets. Taking the time to name the guardian(s), and providing adequate guidelines in your Estate Planning documents early on, helps to ensure your children will be cared for, exactly as you wish, should anything untoward happen to you when they are still minors.
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At FBNQuest Trustees, we provide the expertise for the establishment of a well-crafted Estate Plan, to ensure that your assets are well protected and managed according to your desires.