“A good person leaves an inheritance for their children’s children, but a sinner’s wealth is stored up for the righteous.”
~ Proverbs 13:22
A person’s chances in winning the lottery are probably as high as getting hit by lighting, twice and on the same spot. On the other hand, a person’s chances of dying are guaranteed 100 percent. Moral lesson? Bet on your death. It’s guaranteed to happen. Upon a person’s death, heirs and dependents usually struggle emotionally and financially. But if you plan ahead, you can leave them more than just warm and happy memories.
Although emotional loss is inevitable, financial loss is avoidable. Hence, say hello to estate planning. Talking about death doesn’t exactly make anyone comfortable. However, it is not only integral but also prudent to seriously consider estate planning or preparing the transfer of your wealth and assets after your death. Assets, life insurance, pensions, real estate, cars, personal belongings, and debts are all part of one’s estate. Because as parents and/or breadwinners, we should take care of our loved ones and show that we considered their welfare even long after we’re gone. A well-prepared and well-thought-of will and testament is a sign of our deep and enduring love for family.
You’ve worked so hard your entire life to accumulate a sizeable estate which would include but not limited to, your house, your car, your cash, and all other assets under your name, often, we do this not for ourselves or because of plain ambition but because we want to provide a good future for our loved ones. Your estate should be passed on to your heirs, but this process can get quite complicated so allow me to share a few important notes that you should consider.
- Know what you have. Make a meticulous list of your estate and assess the total value. The estate tax to be imposed can range from five percent to twenty percent, depending on the value of the estate. That will be the amount of money that you and/or your heirs need to prepare to complete the process of estate transfer.
- Get a life insurance policy that will automatically cover the cost of your estate tax and other costs involved in the process. Term insurance is probably the best type of insurance for this purpose since it’s cheap.
- Get a memorial plan that will cover the cost of your funeral. Unlike life insurance, memorial plans are a lot faster to process and memorial services can readily be availed upon the plan holder’s death.
- If your estate is significantly large, setting up a family corporation might be favorable. However, heirs must be articulate enough to understand corporation by-laws and procedures.
- If you have specific requests, writing a last will is very crucial, especially if it involves beneficiaries who are not legitimate heirs.
- If cash is unavailable to pay for estate tax, consider selling a part of the estate at a discounted price to avoid penalties. Estate tax is penalty free if paid within six months after the estate owner’s death.
- Donating your estate to your heirs while you are still alive may save you some money but the risks may not be worth it. If you get into financial trouble while you are still alive, you might not have much of an estate to sell and for some reason or another your heirs may not be able to sell in a timely manner the estate you’ve transferred to them.
- Don’t hesitate to ask a lawyer or financial planner, who is an expert in estate planning, to help you. There may be added costs, but it saves you from all the trouble and unnecessary tax penalties.
Keeping these important factors in mind can help you manage and maximize what you’ve worked for your entire life – your estate. Just as in life, our family was our inspiration, in death, we think about them and their
future. When your time comes, your family will definitely grieve for you. You can make it easier for them if you leave behind a legacy they can cherish and hopefully, someday also pass on to their children and their children’s children.