The mere thought of creating an estate plan can be one filled with fraught and stress. The process of hiring an estate planning attorney can feel overwhelming. However, these decisions have long lasting effects on your loved ones.
Creating an estate plan is not easy, but it’s something that should be done with the utmost consideration. It’s the final legacy one leaves behind after we’re gone. The absence of an estate plan leaves one without any choice regarding what happens to your assets. As a CEO, you should know that with proper planning and help from an estate planning attorney, this situation can be remedied.
We’ve written the following article with the intent of breaking down the reasons every CEO should have an estate plan.
The majority of CEOs are aware of the importance of estate planning. However, too few of them engage in all but the most basic of planning. There’s nothing more unfortunate than seeing a family business or estate fail after being passed on to the next generation.
Principles of Estate Planning
Creating a successful plan is an exhaustive effort, especially when you consider that you won’t be around to see the fruits of it. A proper estate plan has many benefits:
- Avoid an expensive Probate process
- Reduce the probability of fighting over money and personal property
- Prepare heirs for the wealth they will inherit
In order to start the process, it’s important to create a vision for how to proceed once you are no longer here. The following questions can help orient you in crafting it:
- What are your goals as a family?
- What legacy do you want to leave behind?
- How do you want to distribute your assets and wealth?
- How do you want to be remembered?
- Do you want to be cremated or burried?
By having clear objectives, you make it easier on yourself and your estate planning attorney to create an estate plan. It ensures that your vision guides what happens to you and your estate.
Wealth Transfer Strategy
The most common misconception is that an estate plan can cause trouble with the IRS. Nothing could be further from the truth. Creating one is the most secure strategy you can use for the purposes of wealth transfer. A proper estate plan ensures that your designated heirs receive the legacy you’ve determined for them.
Protects Families with Young Children
If you’re the parent of a minor child, an estate plan will ensure that your children are properly taken care of. Creating a last testament will allow you to designate a guardian in the case both parents pass before the child turns 18. When there isn’t an estate plan, then the courts have to step in and make decisions you may not be comfortable with.
Maintain Your Privacy
An estate plan can help to minimize the information that will become public information. Without one, assets can become available to the public upon passing. Creating an estate plan will transfer assets to your beneficiaries in a way that remains private. This includes personal property, bank and brokerage accounts and other real estate. Otherwise, a probate court will take action and settle your estate.
Catalogue Your Assets
Effective estate planning allows you to take inventory of all of your assets. In turn, this will let you consider how you want to distribute them. By having a clear idea of what you own, you also gain an insight into the impact of debts and taxes. . It’s important to calculate and, if possible, reduce the taxes as much as possible, as they will have an effect on the resources you are able to leave behind.
Ensure Survival of Your Business
An estate plan provides the comfort of knowing that an unforeseen death or disability will not negatively impact your business. It can guarantee that your family business will continue by determining what should happen to your affairs.
Prevent Heirs from Overpaying Probate Expenses
When creating an estate plan, you’re protecting your loved ones from potential problems with probate. One of the goals of estate planning is to reduce the financial burden to your family and maximize the amount of the estate that will transfer to your heirs. It’s possible to do so with a minimum amount of stress, something that your heirs will definitely thank you for down the line.
Protect Yourself in Case of Disability
Unfortunately, many Americans suffer from some sort of disability before their passing. You can prevent this by creating an estate plan. By being proactive, you can determine exactly how your disability will be handled. You can ensure that an individual of your choosing is in control of your personal assets.
Beyond the guarantee of securing assets, an estate plan gives you something equally valuable: peace of mind. Knowing that your legacy will be taken care of is priceless.