Nearly everyone has an asset. This means that you may probably do, too, even if you are not aware of it. If you believe otherwise, think twice. Your assets can include your car, your home, your savings or checking accounts, insurance, investments, other personal possessions, and even your pieces of furniture. All these have a value that can be considered part of your wealth. But here is the thing: Regardless of whether you have a huge number of assets or just a bit, you will not be able to take any of them when you die.
That said, the best thing you can do is to have them distributed to the people that matter to you. But how can you do it when you are already on your death bed? The simple answer is planning or setting up a strategy that will make sure your assets will be distributed to your beneficiaries accordingly after you pass away.
Below are some effective estate planning strategies that you can use to protect your assets and keep them away from unauthorized people upon your passing. These strategies can help ensure that all your assets will be distributed and given to your beneficiaries as you wish and that all your efforts will not go to waste even if you are no longer present to manage your affairs.
Get an Insurance
Insurance can help you manage your financial affairs. It helps protect you and your family against any risk of financial loss. Life insurance, in particular, can help secure your family’s financial status at the time of your death. With insurance, your family is left with a non-taxable amount that they can use for the expenses of your funeral, payment for outstanding debts, and other things. Choose the right type of life insurance wisely so your dependents can still enjoy a good quality of life even after your death.
Create a Will
A will is a legal document that spells out what you want to be done with your assets upon your passing, who should be given your assets, and how your assets will be distributed among your beneficiaries. Wills are drafted or created with the presence of a legal counsel or attorney who will execute your wishes after your death. If minor children are involved, a will can also protect them by spelling out conditions on how they should be treated or taken care of.
Sometimes, certain people may challenge the terms written on the will and it may be brought to probate court. To make sure that your wishes will be followed strictly after your death, you must create a testamentary will in the presence of several witnesses and then have it signed and notarized by a trust or estate lawyer.
Have a Trust Fund
Trust funds are entities that can hold your assets until such time that your beneficiaries are ready to accept them based on a set of conditions you have given before your death. Basically, when you have a trust fund set in place, your assets will not be given and distributed to your beneficiaries unless they have achieved a milestone that you have set. For example, an asset may only be given to a beneficiary if he or she has finished college or has celebrated his or her 25th birthday and so on.
Trust funds come in two types, namely revocable and irrevocable. Revocable trust funds are living trusts. Since they are flexible, they may be dissolved any time and may be converted into irrevocable trusts upon the death of the grantor. Irrevocable trusts, on the other hand, are non-flexible. They cannot be changed once they are established. Compared to a revocable trust, an irrevocable trust fund has more tax benefits. It is also more protected from creditors compared to a revocable trust.
Regardless of what type of trust fund you choose, there are always three people involved: the grantor, the beneficiary, and the grantee. The grantor refers to the person (you) who creates the trust fund. As the grantor, you donate anything of value, be it real estate property, money, business, investments, stocks, or just about anything valuable to the fund. You decide the terms that will be carried out after your death. The beneficiary is the intended receiver of your assets. The trustee is the third party who is responsible for carrying out all the terms you have included in your trust fund.
We will all leave this world one time or another. Whatever wealth we have amassed during our lifetime can never be brought with us on our deathbed. The only thing we can do is to make sure that they will go to the right set of hands upon our death and that our families and loved ones are well protected even without our presence. Planning the distribution of our wealth wisely before we die is an essential step in making sure that our families are protected after our passing.