Debt consolidation2 More Reasons for Estate Planning
Copyright (c) 2009 Tom Wheelwright
I do not need to do estate planning right now because my estate is not taxable.
Remember, while it's true an estate may not be in urgent need of estate tax planning, there is still a need for basic estate planning. Estate planning is not just about the estate tax. In fact, some of the most important reasons to do estate planning have nothing to do with estate tax.
Here are 2 more reasons to do estate planning.
#1 Avoid Probate You've probably heard a lot about the probate process, but have you ever heard anything good about it? Most probate stories are nightmare stories. Probate can be expensive, it's a public process and it can be contested. These are just a few of the reasons most people want to avoid probate.
With proper estate planning, it is possible to avoid probate!
Probate is simply the legal process of passing ownership of property from a deceased person to others. With proper estate planning, your assets can be moved out of your individual name in such a way that allows you to enjoy, use, sell, leverage and invest your assets just the same as you do now.
#2 Avoid Distress Sales Most of the clients I work with have a business and/or invest in real estate. These are 2 types of assets that often have liquidity (cash flow) issues. It is not unusual for the cash flow in a business to fluctuate and experience very low points. Likewise, it is not uncommon for a real estate investment to have negative cash flow at times.
Successful business owners and real estate investors know how to deal with these tough cash flow times. But, in many cases, their heirs do not! This often leads to heirs having to sell businesses and real estate for far less than the full value because they don't have the cash flow to keep things going.
Think about what happens here - you've built this valuable business or real estate portfolio only to have it go for a fraction of its true value! Fortunately, this type of distress sale can be avoided with proper estate planning.
If you have a business partner, you and your partner can work out a deal to buy each other out at an agreed upon price. Also, life insurance is a wonderful tool that can provide your estate and heirs with the cash needed to avoid distress sales because it gives them the flexibility of time to wait and get that full-value offer. Life insurance can even be used by your business partner to buy your portion of the business from your estate or heirs for cash.
If You Own a Business or Invest in Real Estate, You Need Estate Planning! You can protect the wealth you are creating in your business and real estate with proper estate planning.