SUCCESSION PLANNING – PART 1
There is a popular adage “failing to plan is planning to fail”.
Planning has been a great part of our lives. Sadly to say, in this modern world, everyone seems to be spending more time in planning where to go for their next vacation, or what car to buy or even where to go for dinner. Very few plan and decide who and how to pass on their wealth to the next generations.
Main reasons why most people put off the estate planning:
- I do not own enough
- I am still young
- I am busy
- I have plenty of time
- I am confused and do not know who to ask for help
- I just do not want to think about it
Undoubtedly, estate planning is not as fun as booking a trip or checking out users’ reviews. But without proper estate planning, it may threaten your entire wealth and everything else that you have worked so hard for.
In this instalment of BBS Pro Talk, we shall study the top 3 reasons why the need for an estate planning.
- Wealth Preservation for Your Intended Beneficiaries
Main component of estate planning is designating beneficiaries for your wealth. Unfortunately, we cannot predict how long we will live, or when illness and accidents will happen. Where there is no proper decision as to who receives your wealth, you will not have any control as to what happens in the event the death strikes. This may mean that some of your loved ones may be left out of the distribution. Plus, the process can take years and can get ugly. Worse still, if there is no one that fits the criteria under the governing laws, guess who keeps your assets?
- Eliminates Family Conflicts
I bet you have seen or heard of those horror stories that when a wealthy person passes away, the war between family members begins. Such internal conflict can get ugly and may end up in court, with family members fighting against each other. Estate planning is even more crucial in a non-traditional relationship where one has chosen to co-living without being married or has been married more than once. It gets even more complicated when one has children from the previous marriage. The last thing you want is to unintentionally disinherit someone you love because you failed to implement a plan for the proper disposition of your wealth.
- Spares Heirs from Creditors
Wealth planning is all about protecting your loved ones, especially from the creditors or even the tax authorities. No, we are not taking about evading taxes, but rather tax planning. With just a little bit of proper planning, one can reduce much or possibly altogether their inheritance tax which can be an enormous amount. Depending on the country of your tax residence, inheritance tax can be as high as 55%! In another words, more than half of your wealth will be taxed upon your departure. A proper wealth management structure can also be the vehicle for sheltering your wealth from creditors’ claims to satisfy debts.
WHAT IT MEANS TO YOU?
Simply put, your wealth does not have to perish with you. If you want to preserve your wealth for generation to generation and having a peace of mind knowing your loved ones are protected and properly taken care of when you no longer can do it, proper planning is vital. Without one, your heirs could face huge tax burdens and the court could designate how your wealth should be distributed and you may not even like it.
The question that confronts us, however, is not who needs wealth management but how to? Choosing the right framework can be powerful to protect your wealth and make sure they are handled with care after your passing.
In the next instalment of BBS Pro Talk, we shall break down all you need to know about wealth planning options and the strategies that can help you and your family take care of your assets for generations to come.