First of all, it is important to define what an estate is. In essence, an estate is anything of value that you own, such as jewelry, artwork, cars, the house where you live, the investment property you bought on the beach, the country house, bank accounts, securities, insurance policies, in short, an estate is anything that has a value and is susceptible to being transferred to your heirs or third parties, whether they are legal entities or physical persons. Likewise, those assets that are not yet in your possession are part of your estate, such as an inheritance that you are about to receive, any debt that is owed to you, a compensation that you are owed for finalizing a lawsuit. Still, we must not forget debts (mortgage loans, credit cards, taxes, etc.) since they are also part of a person's assets.
On the other hand, estate planning is the power to structure and plan the estate with the purpose that, in the case of family estate planning, the assets remain within the family or are transferred to heirs, and in the case of estate planning for business that the company is not affected by the physical disappearance of its owner or owners, in addition to also achieving protection for all these assets and the payment of liabilities.
Yet, you are surely wondering if estate planning is something for you or not, and the answer is very simple: estate planning applies to everyone, however, we frequently find cases where the person did not carry out a planning of their estate at all, which inevitably leads to an impact on the heirs to the extent that they must incur substantial expenses, which may well be unpaid taxes and other debts, as well as inheritance expenses and more importantly, time and mental exhaustion.
The next thing you will ask yourself is if you need estate planning and, of course, we understand that cases vary from person to person, so estate planning is a very personal process, like a tailored suit. What applies to you, doesn't apply to your neighbor, since their situation is different. In this sense, you need estate planning for the following (these are not all the reasons, but the ones I believe are the most common):
- To provide for your loved ones after your departure. You will surely have your partner, children, grandchildren, relatives who need you and your financial support. What would happen to them if you die tomorrow?
- Minimize the impact that liabilities such as taxes may have, since in some countries inheritance tax still exists.
- If you have a business, you can protect it and even ensure its continuity after your death, including intangible assets such as trademarks and patents.
- If you own real estate, you can achieve the protection of these assets and even take advantage of the benefits granted by certain regulations, such as, for example in Panama, the law on family tax patrimony.
- If you live in a country where there are laws where forced inheritance is applied, with good estate planning you can legitimately avoid the application of that rule.
In any case, what is very clear is that the risks of not carrying out estate planning exist and the effects are certainly greater than doing the opposite.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.