Question

An analysis Advising Families on Estate Planning?

Answer 1

Let us first understand 'what is Estate Planning'-

Estate refers to all the assets that an individual own, it can include cash, jwelery, property, stocks etc. Where as planning means making of future plans. So, Estate Planning refers to making of plans for the prevention, management and  transfer of individuals Estate after his/her death. Estate Planning is done by an individual when he/she is legally competant (i.e. when he/she is of sound mind and is in the age of majority). Estate Planning is done to decide to whom the estate of an individual will be transferred after death. Some important terms which are used during Estate Planning are Wills, Trusts and Power of Attorney.

Will- Will is a legal document to provide instruction on how an individuals assets and coustody of minor children (if any) shold be handled after his death.

Trusts- A trust is an arrangement where you entrust property to one person or an organization. Their is a trustee who manages the property on behalf benificiary.

Power of Attorney- Power of attorney gives a person or organization the legal power to handle your affairs when you're unable to do so. The person or organization you appoint is referred to as an "attorney-in-fact" or "agent."

Now Let's discuss about importance of Estate Planning-

a) Protect the family if have young children- In case the child of individual is below the age of 18 (i.e. Minor) and at that time the individual dies. So, in such case protection of his young child will be required. In estate planning the individual will designate how the children under age of 18 are taken care of and why items of his property will be transferred to his child when he will attain the age of 18.

b) Eliminates Family Messes- Estate planning also helps in avoiding family messes between the family members as there is clear in the will of individual that how his assets will be handled after his death.

c) Protecting from High Tax Expenses- Estate Planning also helps in protecting loved ones from big tax expenses means creating smallest possible tax burden on legal heirs.

d) It protects Beneficiaries- The main component of estate planning is designating heirs for your assets, whether it’s a single house or stock portfolio. Without an estate plan the court will decide who will get your assets which will taken long period of time.

Above are the only some important aspects of Estate Palanning. Apart from this their are many more benefits that can be considered.

So, a family should do Estate Planning at the correct time which will help them in later stage of life is protecting their loved ones. Also the financial advisor sholud advise his clients that they should go for estate palnning to avoid many complexities at later stage of life.