If you are too busy living to worry about dying, you could create problems for your family when you pass away. Enjoying life is crucial. Yet, taking the time to think about estate planning is also essential.
If you’ve always assumed that you’ll leave the bulk of your assets to your heirs in one lump-sum payment, here’s why you may want to rethink that strategy and consider something that will better protect your wealth and your heirs, like a trust.
When you leave assets unprotected in your estate, here are things that can happen:
Thinking about how you want to transfer your assets to your family can help protect it. Here are 4 things that could happen if you leave it for your family to sort out:
- Creditors could take your estate: Most people have some debt. If you die before you have paid it off, creditors can lay claim to your estate.
- The tax office could take more than necessary: Take a tip from the wealthy. There are many legal ways to reduce the taxes you pay. No one is going to thank you for paying more than you need to. Least of all your family when they must pay a huge tax bill on the transfer of your estate.
- Your family may fight over their inheritance: Make clear who you wish to leave assets to. A family fallout would be a poor legacy to leave.
- Your family may waste their inheritance: Not everyone knows how to handle money. One source estimates that 70% of wealthy families lose the wealth passed down within a generation and 90% within two. If your life ended tomorrow, consider if your family could make money you leave them last.
There are several estate planning tools you can use to protect your estate, not just trusts. A clear estate plan protects your wealth from creditors. It helps you take advantage of tax allowances. It reduces the chances of family disputes. It increases the chance that your legacy lasts far beyond you. Working with an attorney can help you better understand your options.