Estate Planning Primer: How to Minimize Taxes & Leave a Legacy

Creating an estate plan is something that many people reserve for late retirement. However, it’s important to know that estate planning is for everyone. A well-crafted estate plan can accomplish:

• A strategy to streamline giving your assets to your loved ones in the event that you pass away.
• A clear outline of your wishes should you become incapacitated and unable to communicate.
• A way for you to preserve your wealth and leave a legacy.

Although different people may require different elements in their estate plan depending on their stage of life, everyone should have one in place.

What Goes Into an Estate Plan?

An estate plan can include many different pieces. However, a few basics to consider are:

• Will. A will is a document that outlines how you wish your assets to be distributed after you pass away. It can also act as a kind of “catch all” document that outlines any other requests you may have – like guardianship, beneficiaries, or even if you don’t want someone to receive a portion of your estate.
• Trust. A trust is a tool that can help you to pass on assets to your loved ones while avoiding probate court, and (in some cases) estate taxes.
• Power of attorney. If you become incapacitated, someone needs to be able to make financial decisions on your behalf. A power of attorney designates someone to help you make decisions and control your assets if you’re unable to do so.
• Healthcare power of attorney. The same is true for your health. If you become incapacitated, it’s important that you have your wishes outlined and someone who knows those wishes appointed to make decisions for you.
• Beneficiary designations. Although a will or trust can pass assets on to loved ones, going through your accounts (like your life insurance and 401k) to ensure you have beneficiaries designated is critical.
• Guardianship designations. If you’re a parent of children under 18, you’ll need to consider who you want to raise them should you and your spouse or partner pass away.
• Business succession plan. Many small business owners fail to have a succession plan in place, assuming they’ll always be at the helm of the ship. However, if you own a small business, and have clients, customers, and vendors who rely on you – you need to have a plan in place for what happens to the business and your assets if you pass away unexpectedly – or even if you choose to retire!

Preserving Your Wealth

At its core, the primary goal of your estate plan is to preserve your wealth, and to pass it on to your designated beneficiaries in a manner that you choose. Working in tandem with an estate planning attorney and a tax planning financial advisor can help you to shield your wealth from potential taxes, and maximize your hard-earned estate to care for and empower generations to come. Without an estate plan in place, your assets may be subject to probate costs. These could eat between 3-8% of your total estate. However, with proper titling and direction from your team of experts, these costs can be avoided, and taxes can be minimized.

Leaving a Legacy

You’ve worked hard throughout your life to care for yourself and your family. Your estate plan should reflect that and empower you to make an impact. Whether your focus is to pass assets on to your kids and grandkids, or you’re interested in making an impact on your community or through an organization you’re passionate about, your estate plan can help.

Having an estate plan in place helps to ensure that there is no arguing or family division after you pass away. Your wishes are made clear, and you’re able to proactively communicate your plan for your wealth while you’re still living. This helps you build a legacy you’re proud of, without placing the burden of doing so on the shoulders of the loved ones you may leave behind.

Ask For Help

While it is important not to rush through the process of creating an estate plan, staying vigilant will keep things on track. Working with a financial planner (in concert with your attorney) is a great step because they can review your current financial situation, provide advice for moving forward, and lend an ear as you make these big decisions.

Working with a CFP® Professional who specializes in comprehensive financial planning can help you ensure that you’re truly maximizing your wealth during the estate planning process. They can act as a communication bridge between you and your estate planning attorney, and can even help to facilitate conversations between you and family members as you make these decisions about your legacy.

Want to learn more? Schedule a call by clicking here. Our investment advisors are happy to help you start the estate planning process as part of your comprehensive financial plan.

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