I know this is not something that people would normally want to talk about, especially if you are a young person like myself. But if we are truly in the mindset of building generational wealth, then understanding how to handle your estate planning is something that is vitally important for generations to come. There’s going to be a lot of action-packed information in this blog so make sure you take notes and revisit it as needed.
The Importance of Estate Planning
The biggest thing that should come to mind when thinking about estate planning is how important it is. You want to protect your assets and you want to make sure that you can distribute your wealth according to your wishes upon your death. If you don’t have a plan for your estate then your assets can be distributed through probate court or luck of the draw.
When you plan well you can make sure you pay the minimum on estate taxes or luxury taxes that come with passing wealth down. But ultimately you want to make sure that the wishes of the deceased are honored.
What is a Will
A will is something that carries out your wishes after death. You usually have someone in charge of carrying out your will after your death whether it’s a lawyer or a trusted family member. Some things that are on will is the identity of the person, the list of the deceased assets, and how they should be distributed. It can also state who is responsible for managing the estate of the deceased, this can include funeral arrangements, how they would like to be buried, or who would take care of the children. A will can be a piece of paper or even a video as long as it’s legally binding.
How to Avoid Probate Court
Probate court is what the government uses to determine who gets what if you don’t have any will or any final wishes. So I’m going to show you a couple of ways that you can avoid probate court and be able to make everyone happy, or most people. First thing you can do is have joint ownership of any kind of property or other assets that you own. When one owner passes away it automatically goes to the next living owner without the need of a Court.
Having beneficiaries is another way to determine who gets what, if you pass away. You usually have a beneficiary on life insurance policies and any other kind of investment accounts. I’m going to talk about trust a little bit later but that is another way to help your assets avoid potentially going to Probate Court after your death.
Charitable Giving Through Estate Planning
If you want to give to charity after you have passed on, which is a good idea because that will help with some of the taxes that your future Generations can avoid, the first thing you want to do is identify the cause or the charity that you want to give to. Once you do that you have to choose how you want to give back to them. There are different ways to give to charity including a trust, making a request in your will or even just designate a charity as a beneficiary of your retirement or insurance policy. I would consult an attorney or a financial advisor before you do anything just to make sure that you are taking care of all your legal needs.
Trusts 101
Trusts help with estate planning. There are a couple different types of trust revocable and irrevocable. One can be changed during the lifetime and the other cannot be changed after it’s created. The primary reason that you’re doing this is to be able to protect your assets from any kind of legal claims, creditors or even lawsuits that may arise. You can also do it to benefit any kind of charities that you would like or any kind of special needs that goes with your planning. Estates could disqualify them from any kind of government benefits if they receive a lump sum of money. But overall this is something that’s a powerful financial tool to help with any kind of asset management for you and your beneficiaries.
