The Truths About Estate Planning That You Need To Know

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 … Continue reading “The Truths About Estate Planning That You Need To Know”

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:

Avoid confusion

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.

Avoid conflicts

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.

Types of Loans!

Whether you are looking for a new home or you need to do something that is considerable, it doesn’t matter. There will be some important times when you will essentially have to acquire the services of a loan. You will have to choose from the different types of loans that are available to you. These loans are extremely popular and each one of these is useful. Thus you will have to make sure that you choose the type of loan that is the most appropriate for you.

The conventional loans

Conventional loans are also called as the mortgage credits. These are given by the mortgage lending institutions and are not backed by any kind of agency of the government. The conventional credits can also be either non-conforming or conforming.

The conforming loans

The conforming credits can conform to all the guidelines that are set by Freddie Mac and Fannie Mae. The main guideline is the credit amount that is at its maximum. This particular amount can also vary depending on the location of your home. Various other qualification guidelines are also concerned with the debt to income ratio of the borrower.

The non-conforming loans

The non-conforming loans do not actually conform to all the qualifications and also guidelines that are set by Freddie Mac corporations and Fannie Mae. In case you require a very large credit than that of a conforming loan, you will have to look at the loans that are non-conforming.

A secured loan

With the help of a collateral loan or a secured loan, you will be able to leverage your personal property in order to obtain your loan. If you default under any circumstances, your property will automatically be transferred to the lender. The loan amount and the interest rate can also vary depending on the property’s value. A higher property value can get you a very large amount of loan.

Unsecured loans

Unsecured loans are not generally backed by any collateral. Thus the size of the loan and the interest rate is also determined by your income and credit history. The unsecured loans can also be called as signature loans or personal loans. If you are having a good income, the solid payback plan or sterling credit, these can be very good options.

Open end loans

An open end credit is given with a fixed limit line of credit and it can easily be borrowed again after you have repaid it.