According to the dictionary, the word “estate” has multiple definitions. It can mean social standing or rank, especially of a high order. The word can also mean the assets and liabilities left by a person at their death. For the purposes of thinking about your financial situation, we’re focusing on the latter definition.
Every adult has an estate—because every adult has some type of assets or liabilities. Some children even have estates, if they have life insurance or are the recipients of trust or investment accounts. When you have an estate, even if it’s just in the form of liabilities (debts), you want to have a plan for it in the event of your passing.
It might not be a fun thing to think about, but it is critical. Keep reading to learn why you need to start planning your estate.
Why You Need to Start Planning Your Estate
#1 So you dictate what happens with your assets and/or liabilities
The best way to plan your estate is to have a will in place. A will is a legal declaration of your wishes regarding the disposal of your estate after death, a binding document that outlines how you want your assets disbursed.
Do you want your assets going to family, children, or friends? What if you want some of your assets to support a cause or charity? Maybe you have a person in mind who you want overseeing what happens. All of these factors can be laid out in your will.
The point is that your will dictates what you want to have happen with your things when you pass away. You’re not leaving anything up to chance or guesswork.
#2 So you don’t leave your loved ones trying to figure it out
Another important reason for having a plan for your estate is to avoid having your children or family members trying to figure it out for you. Speaking from personal experience, this is a terrible position to be in when you’ve just lost a loved one.
Leaving your family members to puzzle out what you might have wanted with your assets can cause animosity, bring out greed, and make people feel differently about their relationship with you. That’s not a legacy you want!
Instead of having people fight over your things, have your will in place so no one has to wonder what should happen. No one can argue your wishes—well, they can try, but legally, their argument doesn’t matter.
I had a great conversation on IG Live with @TheEstatePlanningMom – Check it out!
#3 So you know your loved ones are taken care of
As you get older, you will begin to accumulate assets, whether in the form of property, investments, money in the bank, or valuables. You’ll have things that are worth something, and you can pass them down to your loved ones so you know they’re taken care of in the event of your death.
This aspect of estate planning is especially important if you have people who rely on you financially. If your absence would put someone in a worse financial position, you can remedy that problem by having an estate plan. When you pass away and have a will, the process moves pretty quickly.
#4 So you don’t waste money
Do you know what happens if you don’t have a will at the time of your death? Your estate goes into “probate,” meaning an administrator or executor (usually an outside party) is assigned to it. That costs money.
If there are minors involved, each minor is assigned an attorney. That costs money, too. Guess where all the money to pay these costs comes from: Your estate.
Having a will or other plan in place for your estate ensures that your assets are not wasted while people try to figure out what should happen. This leaves your loved ones with more of your money and ensures you’re not paying people you never knew or cared about.
#5 So you don’t let the state or federal government decide what happens
Continuing the example above, a probate administrator or executor will ultimately decide what happens with your assets. They’ll decide who’s a rightful heir and who isn’t.
Maybe you didn’t want to leave anything to a particular person, for whatever reason—but if you don’t have a will and that person is an heir in the eyes of the court, then your wishes won’t matter.
Not only does letting the government have control of your assets make you feel crappy, it will absolutely make your loved ones feel crappy after you’re gone. That will be on top of the pain they already feel because of losing you!
No thank you. Let’s avoid that outcome at all costs by having an estate plan in place.
So where do you start?
I hope I’ve convinced you the importance of having a plan in place for your estate, even if you’re young or don’t have many assets. The best place to start is by hiring an estate attorney. Prices can vary, but they typically aren’t high.
Work with this attorney to have your will created and legally bound. You can also use websites like LegalZoom if you want to get something simple put in place.
If you’re struggling to allocate your income properly, schedule a free consultation with me now and let’s work through it together!
Related: Estate Planning for Millennials
I know this is not a fun thing to think about, but it’s the responsible thing to do! Anything can happen and to make things easier on your loved ones, you’ll want to have a plan for your estate laid out. Don’t put this off! Do you have a will in place? How did you begin the process?
Share your thoughts, questions and experiences in the comments section below!
