The New Year is fast approaching. This means you should be getting all your ducks in a row on the asset management side.
The end of the year also gives you ample time to evaluate your estate plan. Recent political shifts may have a knock-on effect on estate tax laws. And while you can’t predict the future, you can prepare for uncertainties.
Retirement Daily reports the exemption on the 2017 Tax Cuts and Jobs Act is due to sunset at the end of 2025.
The new Republican government has signaled its desire to maintain higher exemption levels. However, it’s important to remain watchful as new legislation comes into play.
Below, we’ll discuss essential strategies to implement in your estate plan for greater peace of mind.
The Measure of Wealth
Billionaire philanthropist Warren Buffett recently shared his thoughts on estate planning. He revealed that he planned to donate most of his wealth to charitable causes.
Buffett’s comments ruffled a few feathers, considering he has three children which would make them the rightful heirs to his fortune. Instead, Buffet said his kids would oversee the charitable trust. To future-proof his estate, he appointed three younger trustees to take over if his offspring passed away before the trust expired.
Estate planning experts say this is a genius move on his part. Not only is Buffet completely transparent but he’s built in a foolproof flexible clause.
Map Your Assets
Your asset manager or financial advisor probably utilizes an estate planning tool to map your assets.
Estate planning software allows them to manage your estate on one platform by organizing documents, allocating assets and linking your will and trusts.
It gives them the ability to create a comprehensive financial plan while keeping you in the loop.
Asset-Map says estate planning software lets clients know if they are hitting their insurance goals if something bad happens.
Reevaluate Your Estate Plan
It’s important to revisit your estate plan at least once a year to avoid any lengthy legal battles. Also, you’re entitled to change your mind. Maybe Roy shouldn’t get the white Cadillac.
Be sure to update your beneficiary designations, will and power of attorney. If the situation is more complex, consult an estate attorney to make sense of it.
Estate planning is typically seen as a confidential topic that is not to be shared with anyone. However, as Buffet suggested, communicate any updates to your estate plan to your family. It helps avoid issues further down the line.
Business Succession Planning
We’ve all seen the outcomes of infighting among family members when giants fall. The Business Journals says business succession should always be considered closer to the new year.
As a business owner, you must ensure there’s a clear transition plan in place in the event of illness or death.
Planning ahead reduces the uncertainty of the direction the company is heading in and encourages growth and readiness for the next generation to take over.
The Great Wealth Transfer
Experts predict a massive transfer of wealth is set to occur over the next decade or so. Called The Great Wealth Transfer, more Millennials will possibly become the richest generation in history.
Investopedia claims trillions of dollars will exchange hands, having far-reaching implications for the overall economy.
Gen-Z is also set to benefit from the Great Wealth Transfer as grandchildren of the Silent Generation.
Some financial advisors recommend that clients share their wealth with their heirs while still alive for a smooth transfer. The message is loud and clear: Don’t wait to pass before sharing your wealth.
Key Takeaways
The estate planning process is more than writing out a will. It’s legally preserving your legacy. Mapping out how your assets will be allocated is the tip of the iceberg.
Tax implications and financial and legal obligations should also be carefully considered. With the proper checks in place, you ensure your loved ones receive their inheritance with as little hassle as possible.
Be transparent with your family about what they stand to gain or lose in the event of your death. Request that your wealth manager map your assets with an estate planning tool.
Reassess your estate plan once a year and inform your loved ones of any relevant changes made. For a family-run business, have a succession plan ready and start grooming the person/s you intend to hand the reins over to.
And, if you take current advice to heart, don’t wait to die to pass on your wealth.
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