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Planning your Estate towards Retirement

Estate Planning is the process involving the transfer of ownership of one's estate to his/her legal heirs after death. Your Estate may include cash, jewellery, house, land, savings accounts, etc. However, estate planning does not need to be for distribution of one's property after death, it may also be used to provide protection for one's money before his/her death. Thus, estate planning could be used to accomplish several goals as follows:

1. To transfer the estate to one's own beneficiaries
2. Estate planning towards use of resources in your golden years
3. To assign legal guardian for minors i.e. under age of 18 years
4. To lay the foundation for minimum payment of taxes on estate

One should start estate planning as soon as one has a tangible asset portfolio, the estate plan should be towards achieving the stated objectives. Estate planning is necessary since it prevents the financial burden (i.e. estate taxes, which can be as high as 40%) to one's beneficiaries in event of untimely death of the owner. Law states that estate planning should be done by a legally competent adult, who is in sound mind and health.

As stated in the free downloadable book "Retire Rich Retire Happy" by Bibi Apampa, Estate Planning includes some major tasks as follows:

-Creation of a will: A will is a legal document that states the distribution of assets after death. In the absence of a will, the state has the right to divide the property in a way that they deem fit which might result in the heirs paying large taxes to the government with high fees without any consideration to the family members of the deceased.

-Deciding the legal guardian for the minors

-To set up Power of Attorney: Power of Attoney gives the power of handling one's affairs to another person either when he/she is unable to do so or maybe in his/her absence.

-It helps to limit the estate tax by setting trust accounts in heirs' name and giving annual gifts: trusts can be testamentary (doesn't apply until death of will creator), irrevocable, revocable, living, charitable reminder or insurance trust.

-Updating life insurance policies etc to beneficiaries

-Desired funeral arrangement

-Assigning an executor to look after the terms of the will

There are numerous tools for estate planning, some of which can be used during lifetime, while some tools are effective only after the death of the creator of the will-

-Tools during lifetime are Trust, power of attorney, gift , partition

-Tools post death : life insurance, will, succession by default

However, there are some risks associated with estate planning

-High Costs of lawyer and taxes. The usual cost of a will is between $300-$500.

-Time consuming and cumbersome legal processes

-Chances of financial and emotional distress for the deceased's heirs if the property distribution is not fair

-Chances of misuse of the will, if in wrong hands

Still, the pro-active approach of estate planning safeguards one's money and needn't be only for the wealthy ones. It even helps to plan for future needs and saves family members from financial crunch upon one's untimely death. More importantly, it helps in maintaining good relations as family members don't end up fighting with each other over their share of the inheritance of the wealth of the deceased.

Article Source: Articles For Knowledge Sharing

About the Author

Article by Bibi Apampa, a Wealth and Business Coach who specializes in helping people Retire Rich, Healthy, Wealthy and Wise. Visit her website to download her book "Retire Rich Retire Happy" at www.RetireRichRetireHappy.co.uk.

by: karentaylor87

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