How To Improve Your Estate Plan


Estate planning is very important. It is not just about minimizing estate taxes. It is what happens to your assets after you die.

Just get started and work with a team:

For many people, a key to overcoming the resistance of dealing with estate planning matters is to just get started. Talk to us. We have very effectively assisted numerous clients with conversations that help them get the ball rolling. We talk about what matters most to you, what you want to accomplish and how you want to pass on your assets. We help to clarify your goals, simplify the estate planning process and provide creative suggestions.

After these conversations, we can meet with you and your estate planning attorney to begin the drafting phase of the process. Quality DecisionsIncluding us in the attorney meetings ensures your goals are properly communicated and implemented. We help to facilitate the process, by explaining concepts and brainstorming ideas with you and the attorney. We review the estate plan documents after your attorney has drafted them, to ensure again that they reflect your intent. We often provide additional recommendations after reviewing the draft documents. Teamwork and conversations are vital in this process.

How to handle distributions to the next generation

There are many ways to handle passing your assets to the next generation. We have extensive experience in these matters as financial advisors and CPAs working with clients. Consider the ages of your recipients and whether they can handle the amount of money they may be receiving. If you anticipate the recipient will inherit $5 million from your estate plan, consider whether that person has ever managed or dealt with that amount of money. If they have not, we advise staggering the transfer of money over a period of time. While many estate plan documents and attorneys provide money incrementally to younger adult children, say in their 20s and 30s, we think this concept is valid for much older “adult children” if they have not handled large sums of money before.

Put the assets into a trust and establish a distribution schedule. The recipient would have use of some money initially and then have the right to receive additional increments, for example, every 3-5 years. There should also be provisions for emergency distributions, during interim periods, subject to guidelines the trustee would need to follow.

The key consideration in whether to gradually release the funds to the next generation is their ability to handle the new wealth. By staggering their receipt of the money, hopefully any financial mistakes (or excessive spending) will be made with the first increment and they will be better able to handle the later increments.

Make distributions flexible, not mandatory

When distributions are transferred from one generation to the next, make the distributions flexible. If your document states that assets are to transfer at a specific age, make the distributions optional. Have the recipient initiate the transfer. If someone is facing a divorce, they may want to delay the distribution of the assets. If the distribution is mandatory, there could be negative consequences. Many issues are easily avoided by having more flexible distribution methods in your documents.

Leave your assets in trust name, to leave them properly

If you have significant assets that you are leaving to family members, we advise leaving the funds to the next generation in a trust for each recipient. If handled properly by each generation, the money is more likely to stay within your family lineage.

The process is not complete when you sign your estate plan documents

Think of drafting your estate plan as setting up an empty box. An estate plan usually involves establishing trusts, which are like empty boxes. When you leave the attorney’s office after you sign your documents, you feel a great sense of relief and accomplishment, that you have finally handled this process.

However, the process is not finished. You need to make sure that your boxes (trusts) are properly filled. Your assets (investment accounts, property, insurance policies, partnerships, etc.) need to be titled correctly so that they are owned in the name of the trusts which are established in your estate plan. If this is not done, more work will be required after you die to ensure that your wishes are properly handled.

If you want to leave assets to a charity….

If you have a retirement plan or an IRA account, your charitable bequest(s) should first be from these accounts, not your other assets. This will be a huge tax savings to your heirs. This needs to be done through the beneficiary designation form of the respective account, not in your will or a trust document.

Estate planning is about much more than reducing the estate tax

Estate planning for a long time has been about reducing a potential estate tax. While this is still important (and I will discuss that in the future), the emphasis should be on clarifying your goals and creatively implementing them.

We strongly encourage family members to have muti-generational conversations about these topics. Talk to your children and grand-children, depending on their ages. This can be difficult, but if done, can be invaluable. These conversations can lead to your heirs being better prepared for their financial future. It can prevent huge financial problems, by talking and planning together now. We are here to assist with these conversations.

Estate planning can be complex. This article has provided some suggestions and I will provide more in the future. Our goal is to help you manage your resources and provide you with clarity, advice and capabilities to handle your various financial challenges.

Thanks to fellow BAM Alliance member Carl Richards for the use of his sketch.


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