As a successful individual who has excelled in your personal and professional life, there are several essential financial planning strategies that you should consider to protect your wealth for both yourself as well as future generations of your family.
Without a comprehensive estate plan in place that includes all of the legal documents, you run the risk of:
- Your heirs have to go through a lengthy and potentially costly probate process
- Losing control of how your assets will be distributed after the demise of the surviving spouse
- Subjecting your heirs to higher estate taxes, potentially reducing the wealth you planned to pass to your named beneficiaries
- Family disputes or conflicts over the distribution of your assets
- Omitting charitable donations to causes that you care deeply about
- Unintended beneficiaries who could inherit a portion of your estate
This guide will look at some strategies you can take today to create a comprehensive estate plan that includes provisions focused on controlling your wealth after you and your spouse are no longer here. Let’s get started.
Read our popular Quick Guide, “Retirement Planning in Grapevine, TX, for High-Net-Worth Individuals.”
Review and Update Your Estate Plan Regularly
Updating your estate plan is crucial to protecting wealth, particularly when there are significant life events, you experience additional wealth, and/or major changes in the tax code. Here’s why staying current is important:
- As a high-net-worth individual, you’ve amassed wealth from various sources, such as your career, investments, real estate, or business interests. Your estate plan should include specific instructions for how you want these assets distributed according to your wishes. This helps to minimize any disputes or legal challenges.
- A well-thought-out estate plan can help minimize tax burdens for your heirs. Estate taxes are a form of erosion that diminishes the value of your estate. Reviewing and adjusting your plan regularly can help you take advantage of tax-saving strategies and ensure that maximum allowable amounts are passed on to heirs and charities.
- Your family dynamics and relationships may change over the years, such as marriage, divorce, new children or grandchildren, or losing a spouse. Updating your estate plan to account for these changes may be appropriate, ensuring your wealth is distributed based on your current situation and wishes.
- Giving back to the community and to causes you are passionate about can be another component of your estate plan. Incorporating a charitable giving strategy into your estate plan can benefit the charities and provide potential tax benefits for your estate and heirs.
- If you are a business owner, having an updated estate plan is crucial if something happens to you. A well-documented estate plan can include a plan that designates a successor and details the transfer of your business interests.
Waterworth Insights: A well-thought-out estate plan should be a critical part of your overall wealth management strategy, regardless of whether you have several more years before your retirement or have already retired. Your estate plan should be a living document that doesn’t gather dust on a shelf and risk being forgotten.
Our team of experienced financial professionals, including Accredited Investment Fiduciary® and CERTIFIED FINANCIAL PLANNER™ professionals, are passionate about helping you achieve all of your financial goals.
Adjusting Your Trust After Your Spouse Passes
Adjusting your trust following the loss of a spouse is essential to keep your financial affairs updated and aligned with your preferences. Navigating through the loss of a loved one is challenging. Streamlining your financial and legal matters during this time can provide some peace of mind.
For example, your trust may include multiple beneficiaries, including your spouse, children, and other family members. Designated beneficiaries may need to be revised to reflect your change in circumstance. A complete estate plan review may be required to reflect any necessary changes.
Trusts often provide control over how assets are managed and distributed. After the death of a spouse, you may need to make adjustments to ensure that your wishes will still be upheld.
One of the primary benefits of setting up a trust is avoiding probate, which can be a time-consuming and costly legal process. However, if the trust is updated correctly and promptly after a spouse’s passing, its effectiveness for bypassing probate should be protected.
Changes in ownership and beneficiary designations can also have tax implications.
Trusts can also provide a level of asset protection for beneficiaries. If the trust is not updated promptly, the intended protections may not be in place, potentially exposing assets to unintended consequences.
Lastly, your trust should reflect your personal and financial goals and the unique dynamics of family members who will benefit from your estate.
Waterworth Insights: In a fast-paced world where time holds immense value, finding a dependable wealth management team is critical. Our commitment is to provide results without causing undue disruptions to your schedule.
We embrace a highly personalized approach, including specialized estate planning services. Collaborating with your estate attorney, CPA, and other professionals is part of our service. We can act as your financial quarterback, helping to coordinate all aspects of your wealth: Planning, investment, tax, legal, and distribution. Our services are meticulously crafted to cater to the unique needs of high-net-worth individuals, families, and business owners.
The Implication of RMDs and Your Estate Plan
RMDs, or Required Minimum Distributions, is a crucial aspect of estate planning for individuals with retirement accounts. These RMDs can have a significant impact on you and your beneficiaries.
For account owners, RMDs play a significant role in tax planning and ensuring the sustainability of your retirement assets. Failing to take RMDs as required can result in penalties from the IRS. However, proper estate planning can help manage these issues in ways that benefit you. By strategically planning RMD withdrawals, you can optimize any tax liabilities and leave a more significant portion of your retirement accounts to your beneficiaries.
When considering beneficiaries, RMDs impact the distribution of inherited retirement accounts. Non-spouse beneficiaries typically must take RMDs from inherited retirement accounts based on their life expectancy. The rules can be complex, and following these regulations can require some specialized expertise.
Estate planning can help structure the inheritance to minimize the tax burdens of beneficiaries while providing them with a sustainable income stream.
Waterworth Insights: As financial planning and wealth management specialists, we help you pursue your financial aspirations and goals. We do this by providing experienced, strategic financial planning and investment advice that builds on what you have worked so hard to achieve throughout your life.
We take great pride in making your financial decisions easier — even as your situation increases in complexity. We deliver you and your family a highly customized comprehensive wealth management service. Connect with us to learn more about our comprehensive estate planning services.
