Planning Your Estate for Easy Transfers of Wealth

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Estate planning and creating a will that will successfully provide your beneficiaries with the money and assets you want them to have is complicated and intimidating. Many families lose their wealth over time because they do not know how to handle it properly; about 70% of families that are rich lose most of their wealth by the second generation that inherits it, and about 90% of families have lost their wealth by the third generation. This loss of wealth can be avoided by preparing for the transfer of wealth as soon as you are able to. If a plan is in place and legally binding, it becomes much less likely for familial wealth to be lost in a transfer.

Creating a Wealth Transfer Plan

For someone who has not been involved in transferring wealth previously, the idea of accounting for your entire estate and deciding where things should go once you’ve passed on can be very intimidating. Although this is understandable, having a solid plan can provide some relief from worrying about the future. Here are some tips to create a successful wealth transfer plan:

  • Review what assets you have: Taking inventory of your assets is one of the most important parts of a successful wealth transfer. Create a list of all your assets, both financial and physical, and make note of where they are located. If you have assets but are unsure of their worth, you can have them appraised for a formal answer.
  • Select your beneficiaries: For many people, this aspect of wealth transfer planning is the most difficult. You may feel pressure from certain people to leave them money or assets, but this is your opportunity to consider your legacy. Children and other loved ones are common beneficiaries, but you can also leave money for charities, alma maters, and more.
  • Create your will: A will is a legally binding document that ensures your financial and physical assets will be transferred to the people you want to have them. These documents are best created with the help of a lawyer, and you will need to choose an executor, or person who will become responsible for executing the wishes laid out in your will.
  • Choose a power of attorney: A power of attorney is someone who you elect to make medical and financial decisions on your behalf in the event that you become unable to do so. This is an important step because they could become partially responsible in the transfer of your wealth.
  • Keep important people informed: Making sure that everyone involved in your estate is aware of the responsibilities they hold is important. Making your plans and desires known to your heirs can help avoid conflict about your wealth transfer once you are gone.

What to Tell Future Generations

Giving someone the responsibility of handling your matters once you have passed on or become unable to handle them yourself is a big weight to carry. To make sure that your loved ones understand and will be able to fulfill your wishes once you are gone, you might want to consider giving them the following information:

  • Any documentation showing your full net worth and providing a full view of your wealth
  • Your personal wishes for memorial services, burial or cremation, etc.
  • The estate planning documentation you have created, including but not limited to:
    • Your will
    • Your power of attorney
    • Your HIPAA (Health Insurance Portability and Accountability Act) form, which gives a person of your choice legal access to your healthcare records
    • Revocable living trust
    • Pour-over will, which will account for any assets not included in your trust or stand in place of a trust if you decide not to use one
    • Irrevocable life insurance trust, which can provide financial help for your loved one in the interim between your death and the execution of your wealth transfer and also removes life insurance from the taxable part of your estate
  • Who you have selected to be your power of attorney as well as the executor of your will
  • If you have created trusts for your family members, providing them with the benefits of their trusts can help them in the long run. Benefits include things like:
    • Education opportunities
    • Protection for beneficiaries with special needs
    • Professional property and account management
    • Smaller estate taxes
    • A legacy for future generations
  • What your goals are for the inheritances you are leaving
    • This gives you an opportunity to let your heirs know what you want the money you’re giving them to be used for and who the trustees of any trusts you have created for your them will be
  • Where your important documents, such as banking information and passwords, are located
  • The contact information for important people involved in the transfer of your wealth, such as your lawyers, financial advisors, accountants, insurance agents, etc.

Providing your heirs with a strong foundation and understanding of what your wishes are and how they should be executed is important because it can help prevent issues down the road, such as disputes over who is supposed to make decisions and who should receive what assets. It will also provide you with a certain level of comfort because you have done all you can to ensure your estate will be handled correctly.

Other Options for Passing Down Wealth

Although wealth transfer plans are the most commonly used method of passing down large assets through generations, some people opt for other methods. One example would be an estate plan, which features many of the benefits of wealth transfer plans. Estate plans are, however, less involved. An estate plan will help your loved ones avoid expensive legal costs and stress and will ensure your wishes are followed regarding the distribution of your assets.

Estate plans also allow you flexibility in who will benefit from your assets. Without one, the government will decide who receives your assets, usually the closest living relative. With an estate plan, you can choose to leave them to your family members, charities, close friends, or use them to pay for services. Wealth transfer plans include everything an estate plan has but adds another layer of detail that can help prevent family drama and the loss of wealth. Wealth transfer plans make clear your decisions about heirs and who will receive your assets, and prepare those beneficiaries by introducing them to your attorneys, financial planners, etc.

Contact an Attorney Today

If you have started feeling like you want to begin planning what will happen to your assets when you are gone, contact Legacy Law Centers today. At Legacy Law Centers, we understand that planning your estate and creating a wealth transfer plan will protect you and your loved ones for years to come. We pride ourselves on providing our clients with peace of mind and empathetic, detailed service. Our goal is to build an effective estate plan for you and your family that can grow over time. We can be reached at (571) 200-5559 or via the contact page on our website.

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