Important Things You Need To Know About Estate Planning
It's never too early to get into it
Have you encountered siblings who fight over properties and inheritance in the absence of a last will and testament from their deceased parents? Or worse, have you experienced it yourself? Prevent this from happening to your family. At the risk of sounding morbid, it is better to plan how things will be after your death so your children won’t have to fight with each other (or worse, with other relatives of yours) on who gets which. Get into the task of estate planning while you are still alive. Here are important points to remember:
1. It’s never too early to start planning.
A person’s estate consists of assets like real property, bank accounts, life insurance proceeds, retirement benefits, stocks and other securities, personal property like cars, jewelry, works of art and the like. Estate planning, therefore, is the process of dividing these assets among heirs and beneficiaries, which includes members of your immediate family and children—including those adopted or born out of wedlock. If your estate has been planned before your death, at the time of your passing, it will be clear who gets what among your assets, reducing the possibility of feuds over money and property.
2. When planning your estate, create an inventory of all your assets and properties.
These include things that you own, like bank accounts, any type of insurace and financial plan, and properties. In fact, when you acquire a property—whether it is of small or huge value—state in a legal document what should be done with it when you have passed on.
3. Yes, availing of life insurance is one way to plan your estate.
Seek the help of a financial adviser for this. If you avail of a life insurance, in effect, you're building an estate in a sense that you are making it grow over the years, conserve it, and transfer it to your beneficiaries.
4. Put it in writing and update it periodically.
There’s no hard and fast rule on when you should update your last will and testament, but do so especially if your financial situation or personal circumstances have changed, or those of your intended beneficiaries. If you wrote a notarial will or one that is made with the aid of a lawyer, have it signed by you and two instrumental witnesses and acknowledged by a notary public.
5. Prepare for the cost of planning an estate.
These costs are the following: Standard taxes and fees, which are taxes payable to the national government via the Bureau of Internal Revenue and to the local government units and concerned government agencies like the Registry of Deeds; professional fees which are payable to a lawyer or an estate-planning consultant; and other fees and charges which may include expenses, aside from the ones payable to the government, like premiums for insurance and bank charges.
6. Make sure your tax payments are up-to-date.
See to it that you have paid your real estate tax ("amilyar"), which is paid annually, and estate tax, or tax that is levied by the government on the person upon his or her death. This should be paid six months after the person’s death. Failing to keep your tax payments up-to-date will place the burden of paying for penalties on your heirs.
Read the original article (“Right Here, Right Now: Starter Guide To Estate Planning”) in the May 2015 issue of Good Housekeeping Philippines magazine. Log on to summitnewsstand.com.ph/good-housekeeping for more details.
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