When you are young and zooming along on the interstate at a sedate 110 mph, death is the last thing on your mind. In fact, you probably spend most of your days thinking about what things need to be done, and all the things you are looking forward to.
While you may realize that death is bound to knock on your door some day, estate planning is just something that may not matter much in your life. Unfortunately, many people that have discovered they have terminal diseases or wound up in deadly accidents leave behind family members that cannot adjust financially to the loss.
At the same time, those people you care about most will be at the mercy of unsavory bill collectors, tax collectors, and just about everyone else that wants the prime pickings of everything you left behind. Fortunately, developing a comprehensive estate plan is not all that complicated.
Basic Problems With Wills
If you are reading this and feel alarmed by what kinds of things can happen to your heirs, then you may think it best to go to the local stationary store and buy a form that lets you make out your last will and testament.
While this document can be used to put your wishes in writing, there is no guarantee that everyone will respect what you wrote down.
* Bill collectors that you don’t acknowledge will sue the estate for what they say you owe them
* Family members you haven’t spoken to in years will suddenly claim they deserve some part of what you left behind
* Your will can be contested if it is claimed that you were mentally unfit to make these kinds of decisions. For example, if you are in a bad accident and on morphine (or any other potentially mind altering drug), your deathbed can be contested.
* The tax collector will immediately demand money on all assets be paid by your heirs even though they can’t afford to pay it
Benefits of a Living Trust
In essence, a living trust is very different from a will. While you are alive, all of your assets are placed in a trust that you keep control of. Upon your death, everything in the trust becomes administered by your heirs.
For example, if you set aside several thousand of dollars in your trust to take care of your pet rabbit, the new administrator of the trust must use that amount of money for that purpose. Typically, living trusts cannot be contested, and those who become administrators do not have to pay taxes on it since they don’t own the assets.
No matter how busy you may be making your way in the world, it never pays to wait in terms of estate planning. In fact, even if you have very few assets, a living trust can enable what little you have to go to people you care about.
At the very least, if you have not set up a living trust, you can visit your lawyer and ask for more information. Once you become fully aware of what can happen to your assets after you pass on, you will truly understand why estate planning is such an important part of being a wise investor.