Your All-In-1 Guide to Estate Planning and Preparing Your Legacy

Life goes by so quickly, and retirement often sneaks up on us before we have a chance to plan for it properly. Nobody likes to think or talk about their legacy and how they will pass your wealth onto the next generations. To improve your state of mind and reduce the worry about the future, consider creating an estate plan to detail your wishes and protect your heirs’ assets.

Some financial advisors prefer to focus on investments to build an adequate nest egg for your retirement. Still, they often neglect to discuss legacy planning and how you will pass your wealth to the next generation. Of course, creating wills, trusts and gift plans is essential, but if you ignore topics like long-term care, high healthcare costs may wipe out your assets before you have a chance to pass them on to your children.

Your estate plan needs to include all of the scenarios you may face so you aren’t surprised when life throws you a curveball. Investing time and energy in estate planning also allows you to protect your assets from excessive taxation and healthcare costs.

Legacy Planning

Legacy or estate planning is an essential part of financial planning. Creating wealth through investment strategies is an important part of your overall retirement plan, but many people fail to consider the ramifications of transferring that wealth to the next generation.

Communicating your wishes to your spouse, children and other stakeholders will go a long way to reduce infighting and animosity involved with estates and inheritance. Families are emotional and grieving after the death of a loved one and often act irrationally. You can avoid these conflicts by educating your loved ones well in advance. Let them know your wishes for your estate, how you expect them to behave and how to best use the newfound wealth.

The next step is to compile your records and write down your wishes before sitting down with a financial planner or attorney. It will help to have your retirement plan available to review your assets before creating the estate documents. A written plan is not always required, but several documents you will need to prepare as part of your estate plan.

A Will or Trust

A will is a legal document that communicates how your assets will be distributed upon your death. You will appoint an executor to handle your financial details and distribute your assets as directed. The executor can be a family member, attorney, accountant or other trusted individual.

A trust is another type of legal document that is often used to protect assets from inheritance taxes, probate and nursing homes.  A trust usually consists of family members and a professional trustee who manages the assets. There are different types of trusts which will vary based on the laws of your state.

Other important living will documents include a healthcare proxy that appoints a person to make health decisions for you, and a power of attorney form, which appoints a person who will make legal and financial decisions for you if you are unable to.

These documents are often drawn up simultaneously and can be modified as needed.

Funeral Arrangements

Planning your funeral is not a task most people enjoy, but if done in advance, it will save your family from making difficult decisions at an emotional time. It’s common for pre-retirees to visit the local funeral home and pre-pay for their funeral expenses and burial plot or cremation so that their family doesn’t have to deal with unpleasant tasks.

Family Gifts

Giving gifts to your family is one way to distribute your wealth. The IRS allows a certain amount of money and property to be gifted every year without taxes. Making donations to charities is another way to reduce exposure to estate taxes and to make an impact while you are living.

Life Insurance

There are different types of insurance vehicles to help you plan for the future. Term insurance pays out a lump sum to a beneficiary at the time of your death. Whole life insurance accumulates value over the policy’s life and includes a death benefit. Speak to a financial advisor or insurance agent about the pros and cons of these types of programs.

Business Succession Plan

As a business owner, you are responsible for the continuance of your business and the welfare of your employees. Developing a business succession plan creates a smooth transition to the next management team.

Avoiding Probate and Estate Taxes

Developing an estate plan with the appropriate documentation will help your heirs avoid probate court, where a judge will decide how your assets are divided. It will also help your family from paying both state and federal estate taxes if the value of your estate exceeds certain limits. Since these limits change depending on the political winds, you must protect your assets from unnecessary taxation.

It’s Never Too Late to Start Legacy Planning

Do yourself and your family a favor, and don’t put off legacy planning. It will save your family money and keep the peace after you are gone. Talk to the financial advisors at Eagle Wealth Consulting about our estate planning services and how we can protect your wealth for many generations to come.