Whether you have just purchased your first home or you’ve been a homeowner for years, securing your financial assets like a house is a critical task. Have you heard of Estate Planning? It’s not a topic that conjures up happy feelings, but once you’ve done it, you will feel content in the knowledge that your assets will be distributed according to your wishes when you’ve passed on.
In this article, we take a closer look at what estate planning and why it’s a good time to do it as a homeowner.
What is Estate Planning?
Unless you’re nearing retirement, estate planning may be the furthest thing from your mind. You want to spend your life enjoying it, rather than planning who will inherit which asset or personal item when you’ve died. However, as we do not know when our time is up, as soon as you get an asset like a house estate planning really should be at the forefront of your mind.
Therefore what is estate planning? By definition, estate planning means you make plans for the transfer of your estate, which means all the property you own after you die.
Your estate will include your home as well as all the contents, land, vehicles, cash in the bank, investments, and so forth. So it goes much deeper than just the home, but obviously, the house will be a considerable chunk of the estate’s value for most people.
Can You Get By Without Estate Planning?
The short answer is estate planning is not compulsory so you can choose not to do it. However, with clear instructions on your preferences for the distribution of property and assets, your beneficiaries (the people and entities that will inherit your assets or the money from the sale of the assets) may end up fighting over the distribution according to the rules of intestacy.
Therefore to avoid confusion among your beneficiaries, especially when emotions are running high soon after your passing estate planning ensures the distribution process is straightforward, simple, and legal.
How Do You Go About Estate Planning?
When you’re ready to create an estate plan, you’ll need to an attorney. Hiring an estate attorney is your best option as while most lawyers aka attorneys can create wills and Memorandum of Wishes, the attorneys that specialise have greater knowledge and experience which may come in handy should the distribution of your estate is contested. Plus you won’t want to rush into creating the plan.
Learn all you can on what is required and what you can do for example think ahead; you may at the time of drawing up the estate plan have one property however you’re planning to have a portfolio of rental houses so you will need to ensure your attorney is aware of your current and future plans to acquire more assets. This knowledge can change how the assets are dealt with in distribution.
Engage your accountant in the process, too, as this professional knows more about your financial position. For example, if you have $1million in assets, do you want them sold, and the money distributed at once or do you want to spread the distribution over a few years?
Property investors can acquire $millions, yet their beneficiaries may not be good with money, so an instruction to sell down one or two properties per year to distribute funds to beneficiaries may be a better option. With so many options, an estate attorney and your accountant are the best professionals for the job!
Planning for the Future Makes for a Smooth Ride
While it’s true that no-one wants to think about dying and how and when that day will come, it is a fact of life, so why not be as prepared as possible. Taking the time to plan your estate means your family will be able to spend time grieving their loss and not worrying about all the financial details.