Estate planning is the process of organizing your assets and creating a plan to ensure that they are transferred to the people or organizations that matter to you. It is essential for everyone, regardless of their net worth, to have an estate plan in place. Not only does it help protect what matters most and contribute to an efficient wealth transfer, but it also eases the burden on your loved ones. A comprehensive estate plan generally aims to establish tax-efficient ways to transfer assets to beneficiaries. If your estate plan is out of date, your heirs could continue to face some of the problems you worked so hard to avoid.
And, of course, if you've had more than one spouse or have children from more than one family, it's urgent to draw up an estate plan. It's important that your estate plan also addresses the possibility of you becoming physically or mentally incapacitated. Before deciding what makes sense for your estate plan and who you're going to transfer it to, you'll need to know your specific assets and liabilities and where they are located. Scott Brennan, director of trust management at RBC Wealth Management in Asia, explains that estate planning is a way to protect your assets while, at the same time, providing for your loved ones and giving them financial security for the future. Estate planning is about protecting your loved ones, which means, in part, providing them with protection from the Internal Revenue Service (IRS).
For example, if you own many asset classes and have complex family dynamics, you'll need a more sophisticated and solid estate plan. In addition to making sure your assets reach the people you choose, planning can also help minimize income, gift, and wealth taxes. Without an estate plan and, specifically, a will, your state laws will determine what will happen to your possessions and the courts will decide who gets custody of your children. Kiang points out that the first step in the process is to accept the fact that it is necessary to organize your assets and create a plan. Estate planning isn't just for the wealthy, and it doesn't have to be too complicated or expensive a process. The transfer of assets to heirs is essential for estate planning with the goal of creating the lowest possible tax burden for them.
Having plans in place not only helps protect what matters most and contributes to an efficient wealth transfer, but it will also ease the burden on your loved ones.