3 Reasons Why You Need Estate Planning
Posted by Ocean Wealth
Nobody wants to think about estate planning. Alas, death is a reality of life that everyone has to take into consideration at some point. If not for yourself, think about the family and loved ones you’re leaving behind. You want to make sure they’re in the best possible financial situation when you pass.
Estate planning can help with that. It gives your loved ones the confidence to know they won’t have to do any extra financial planning after you pass. The last thing you want to do is dump your financial burden on them, especially in a time of grieving. All it takes is some careful planning and foresight if you want to avoid that. You need to sit down with a financial advisor and identify your executor and beneficiaries for a smooth transition.
Of course, there’s more to estate planning than simply dividing wealth. In this post, we’re going to take a look at some of the key benefits of having one in place. Despite popular belief, estate planning isn’t something only reserved for the wealthy. Every person of any financial standing should go through this process.
Identify Your Inheritors
Perhaps the most important part of any estate planning process is deciding who will inherit your assets. If you have a wife or kids, you might think, “My estate will obviously go to them.” That’s not always the case, especially if it’s not explicitly stated by you in a will.
In fact, it’s not uncommon for these situations to turn into ugly legal battles. For example, if the matriarch of a family passes away with five children and no will, those assets from her estate will have to be divided among the surviving children. That can lead to very tense and uncomfortable conversations about who deserves what and why.
If you make estate planning a priority, you can avoid this kind of situation entirely. You can be clear about who you want to have what. Whether it’s your son who gets your prized car or your daughter who gets your beloved diamond ring, you can make all those decisions beforehand to avoid any potential family conflict down the line.
Protect Your Young Ones
Estate planning is especially critical if you have young children under the age of 18. As difficult as it may be to think about, imagine if you and your spouse pass away in a tragic accident and you leave your two children, aged two and four, behind.
Who's going to take care of them? What assets will they receive when they’re finally of age? Well, the answers to those questions won’t even be up to you if you don’t have an estate plan. The courts will make that decision for you and who will raise your children will also be up to them. It’s a disturbing thought to be sure, but it’s a scenario that’s much more common than you might think.
To avoid that, you need to identify your children’s legal guardians in case of such an event. Whether it’s another family member or a close friend, your guardian needs to be someone you trust wholeheartedly to take care of your children if you unexpectedly pass. You can also outline what assets you want to give each child when they turn 18 so that inheritance doesn’t go to the wrong person.
Tidy Up Your Taxes
There’s a saying that only two things in life are guaranteed: death and taxes. Unfortunately, that statement is as true as they come. While there’s no inheritance tax in Canada per se, the government still has the ability to tax you on certain assets you owned when you were living.
The government can tax you on businesses and investments you made that your beneficiaries will have to clear the tab for. They can also tax you on your physical assets that have increased in value over the years, such as a car or home. Needless to say, all these taxes add up and they can leave your loved ones in a precarious financial situation without an estate plan. The more thorough your planning is, the better overall estate you’re leaving behind.
Execute an estate plan with confidence and peace of mind. Our trusted team of financial advisors can help you make the best decisions for you and your loved ones. Contact us today!