Do you have financial goals? Of course you do. Everyone has some financial goal they would like to reach. Maybe your goal is to provide for all of your family’s needs. Maybe you are looking at traveling. Retirement might be on your mind. However, there is one financial goal that many seem to neglect. Many ignore the need to save and ensure assets that will keep their family from dealing with a huge financial burden should something happen.
Unfortunately, some people believe that having only assets in the market is a safe way to go. This isn’t a good strategy, as the wellbeing of the future is in the hands of how the market is going at the time. If it drops unexpectedly, or something happens and at the time the market isn’t up, you may be looking at a huge problem.
In 2008 there was a major financial crisis. It was considered to be one of the greatest financial crises since the Great Depression. The housing market suffered, resulting in evictions and foreclosures. There was a period of prolonged unemployment. The crisis played a significant role in the failure of key businesses. It costs an estimated trillions of U.S. dollars.
Now imagine that you were asset rich, but monetarily poor during this time. Imagine something happened to you. You were in a car crash, a house fire broke out, or some other (Heaven forbid) tragedy. It’s hard to imagine, but things do happen. We often think, “not me,” but the reality is that it could very easily be you. In October of 2008, when the financial crisis happened, all assets were reduced by 30% to as much as 50%. The values of assets were reduced, but the debts remained the same. If something were to happen to you during this time, your family would have a financial gap to manage.
At this point we can all agree; it is important to plan for unexpected circumstances and to avoid putting all of our savings into market assets. With that having been said, many people have either never heard of Estate Planning, or don’t know the great possibilities that come with it.
It is vital to go through the process of Estate Planning. It is a planning process to ensure that assets exceed debts, and to transfer the net assets to the loved ones in a smooth, and easy process. It is one of the best plans to avoid any delay in meeting the financial needs of the loved ones should something bad occur. Proper planning will minimize unnecessary costs such as legal, admin, and accounting costs. Why pay more when you can pay less through Estate Planning?
Estate Planning serves to avoid the 2Cs:
If all you have is assets, there is a good chance that your family will be confused with the outstanding debts versus the assets available. Not to mention, if the values of your assets are reduced because of market situation, it will only cause more confusion. With proper planning, the right beneficiaries will receive the financial inheritance that you desire to pass on.
We have all heard of or seen the family that becomes divided because of inheritance passed down from the deceased. Estate Planning will work around any conflicts that can arise because of “assumed inheritance.”
Estate Planning is for everyone, as long as you have something to pass on to your loved ones. It can be a HDB flat, CPF monies, insurance payouts, or cash in the bank. It takes great planning to avoid the 2Cs that can become a burden to our loved ones. Plan for your loved ones to avoid the uncertainties.