Estate planning can seem a bit morbid and many of us put it off because of this. However, it’s a necessary task that everyone needs to think about at some point. Getting it out the way early can be worthwhile for ensuring that your wishes are honoured and for putting loved ones at ease. This post explains more as to when to consider estate planning.
What is estate planning?
Estate planning involves financially preparing for death, as well as determining who will receive your property and possessions when you die. It can involve several tasks including:
- Writing a will: Making a will is essential for putting into writing who will receive your money and possessions when you die. Once signed by two witnesses, the will is legally binding and your wishes must be carried out when you die.
- Setting up trusts: Trusts allow you to put money into specialist accounts for loved ones to receive after you pass. You cannot access this money after it is put in an irrevocable trust (although living trusts can be accessed).
- Taking out life insurance: If you haven’t got any assets to pass down when you die, you can set up a life insurance policy instead, which will pay out money to your loved ones.
When should you start thinking about estate planning?
Many people look into estate planning after key life events. A few times when estate planning can be worthwhile considering include:
When you buy a property
If you die tomorrow, who will receive your property? Estate planning ensures that it is passed on to the right loved one after you pass away. When it comes to high value properties, you may also want to look into ways of reducing inheritance taxes for your loved ones, which an estate planning lawyer can help you with.
When you get married
When you get married, most of your assets are automatically passed on to your spouse. This may be something you are happy with, however some people like to be able to nominate other beneficiaries.
When you have kids
Got kids? Deciding which assets to pass onto them is important - you will need to write a will to determine exactly who gets what. You may also want to set up funds for them or set up life insurance to make sure that they receive some form of payment.
When you get divorced
Getting divorced means that your ex-spouse will no longer receive any of your assets when you die. However, in some amicable divorces, some individuals may still want their ex-spouse to receive these assets.
Whenever you have the time
So long as you are over 18, it is never too early to start looking into estate planning. Some people don’t realize that a will can be amended at a later date if circumstances change. Similarly money in living trusts can be removed and beneficiaries of life insurance policies can be reappointed if necessary. Therefore, it can be worth thinking about plans whenever you have the time.
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