There is a common misconception that estate planning is only useful for those with extraordinary wealth or extremely complicated financial situations. While it’s certainly true that estate planning is useful in both of those scenarios, that does not mean that an estate plan is only for the rich and famous.
In fact, many family or financial environments naturally lends itself to estate planning. To that point, estate planning involves far more than just deciding who gets your assets upon your passing. Instead, a good estate plan that is appropriate to your particular financial circumstances and goals will provide you control over your assets, even after your passing.
Control From Beyond
Exerting control over your hard-earned assets after you pass away isn’t so much about controlling those that inherit those assets but, rather, more about your money being used in a manner you deem responsible. Of course, more often than not money is transferred to heirs without strings attached and can be used as those heirs see fit. However, there are times and circumstances that call for control mechanisms that can only be made possible through an effective estate plan.
For example, assume there is a grandmother that absolutely relishes seeing her grandchildren grow and flourish. Given the complicated society we live in, however, at least one of those grandchildren will likely have some sort of issue that is of a concern to their grandmother – perhaps legal troubles or even substance abuse.
While that grandmother would like nothing more than to provide a portion of her assets to each of her grandchildren upon her passing, she’s rightfully hesitant to give free reign over a substantial amount of money to a grandchild that struggles with substance abuse, strictly out of concern for their well-being.
For that reason, the grandmother can include specific language within her estate plan – specifically her living trust – that allows her grandchild with substance abuse issues in their past to inherit a certain amount of money over a certain amount of years as long as they are able to pass a random drug test every year. While some might see this type of restriction as extreme, it provides peace of mind to the grandmother that can only be provided by an effective estate plan.
Aside from control mechanisms, estate planning can also include tax efficient strategies into an estate through a variety of different techniques. Historically speaking, the tax code has provided certain provisions to taxable estates that allow them to either pay, lower, or even eliminate estate taxes when used properly. Of course, relying on the knowledge and skill of a tax specialist and estate planning attorney can greatly improve your chances of making your estate as tax efficient as possible.
Estate planning also addresses factors other than assets and taxation. A comprehensive estate plan will also include medical directives, beneficiary designations, and other ancillary documents that can be important in your final moments. Remember, when a loved one passes away, things like money and account maintenance are often the last thing a family feels like dealing with. However, those are often the items that should be dealt with when someone passes away.
A comprehensive, well organized estate plan can greatly simplify and streamline the process to take a burden off of your loved ones in the midst of their grief.
Gary Marriage Jr. is the founder and CEO of Nature Coast Financial Advisors, which educates retirees on how to protect their assets, increase their income and reduce their taxes. Marriage is a national speaker, delivering solutions for pre-retirees, business owners and seniors on the areas affecting their retirement and estates. He is an approved member of the National Ethics Bureau, and has been featured in “America’s Top Hometown Financial Advisors 2011” and was selected to contribute to a book with Steve Forbes titled “Successonomics”
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