Many people decide to plan an estate out of concern for their families. It might be the death of a parent or the birth of a child that makes someone realize they need to draft a will. Personal resources can also be a reason to create an estate plan. The assets that someone owns may pass to specific people or could become the property of the government if someone dies without an estate plan or surviving family members.
What types of personal property might warrant the creation of a will or other estate planning paperwork?
Real estate
Buying a home is often one of the most important adult achievements in someone’s life. The house where someone lives may represent the vast majority of their personal wealth as they slowly accrue equity in the property. All of that could be at risk or might go to the wrong person if someone doesn’t establish an estate plan. A will, a deed or a trust can help ensure that the right party assumes ownership of a home after someone dies.
A business or professional practice
Some people inherit the family business when their parents retire. Others start a company to use their education or experience to generate income. Often, those who own businesses use trusts as a way of protecting the business. That way, it can continue operating for Generations without the risk of beneficiaries selling off the business assets for short-term financial gain. Other times, people may address a business in their will, especially if they intend to close it down and liquidate its resources after they cease operating the company.
Retirement or investment resources
Funding a 401(k) can lead to a sizable account by the time someone is ready to retire. Ensuring that the right party assumes control over those assets if someone dies can be important to an individual who made personal sacrifices to set that money aside. Those who have investment resources, ranging from certificates of deposit and real estate holdings to stocks, may also want to designate beneficiaries to receive those resources. Trusts and wills can work for financial resources. People may also want to consider adding transfer on death designations to financial accounts to keep those resources out of probate court.
Creating an estate plan can help someone maximize the positive impact that their assets have on others after they die. Those who make the decision to draft documents earlier in life may benefit from many years of protection and peace of mind.