Many people think you have to be rich to start estate planning, but that's not the case! Estate planning includes all your assets regardless of size, which is why you should plan for them. Your estate consists of your home, car, real estate, investments, life insurance, checking and savings account, furniture and other personal possessions.

But what is estate planning? Estate planning is the process of naming who will receive your assets and taking care of your responsibilities in cases of incapacitation or death. The goal is to ensure beneficiaries receive the assets with the least amount in taxes, court costs and legal fees.

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Generational Wealth Transfer

Generational wealth transfer means transferring wealth from one generation to another and it's an integral part of the estate planning process. A professionally crafted plan to transfer your wealth will help reduce unnecessary income tax and estate tax liabilities. Moreover, a generational wealth transfer plan will protect your family from court battles, which could eventually lower the value of the assets.

Probate Avoidance

After a person's death, distributing his or her assets to beneficiaries may need probate proceedings. These proceedings are potentially costly, time-consuming and public. The goal of estate planning is to avoid probate.

Involving Children in Decision Making

Many people create an estate plan and name their children as beneficiaries or trustees. However, many fail to include children during the estate planning proceedings. Involving your adult children will help smooth the process. Also, having children present when meeting with estate planning attorneys and financial advisors will allow them to ask questions regarding estate planning.

Start by setting a place and time to discuss without any distractions. Speak to your children about what you are comfortable sharing about your estate plans.

Charitable Remainder Trust

A charitable remainder trust lets you convert highly-valued assets like real estate or stock into lifetime income. It helps reduce income taxes now and estate taxes after death. The trustee sells the asset and re-invests the proceeds in income-producing assets. The trust pays you an income as long as you live. When you die, the remaining trust assets go to your chosen charities.

What is the difference between a will and estate planning?

Estate planning is the comprehensive procedure of preparing and describing tasks for the transfer and management of your assets upon death or in the event of incapacitation. It includes naming the people or organizations who will receive your possessions. On the other hand, a will is a legal document that clearly indicates and sets forth your final wishes on how you want your property distributed, the beneficiaries and family care after you die.

When should I start estate planning?

Many people think that estate planning is for the elderly, but that's a big misconception. It's recommended to start estate planning immediately after you have acquired your assets. You can begin estate planning as soon as you turn 18 or become a legal adult. This makes it easier to track and make changes. Ensure you also update it every three to five years. However, make sure you begin the process by contacting an experienced attorney to guide you.

Who needs an estate plan?

The short answer is - everyone. At the least, you should own assets and have reached adulthood. Anyone who wants to make it easy for their family, other beneficiaries or organizations and protect them when transferring and managing assets upon death or incapacitation should establish an estate plan. An estate plan is for anyone who needs to protect adults, minors and other beneficiaries from bad decisions, external influences and other related issues

What should be included in estate planning?

While an estate plan helps the management and transfer of your assets and beneficiaries upon death or incapacitation, there are some critical components that each document should contain. A legal estate plan should include a will, trusts, power of attorney, healthcare directives and beneficiary designations.