The Financial Planning Blog
Your go-to financial planning and wealth management resource, whether you're just getting started or well on your way to a financially secure future.
If you’re like many people, you think of estate planning as what to do after someone dies or something you’ll address later in life once you build substantial wealth. But in reality, you need to protect your assets and make your intents known no matter how old you are. Even the basic estate planning concepts mentioned in Consumer Reports “How to Create a Bullet-Proof Estate Plan” can help you care for loved ones, leave a legacy, possibly reduce transfer taxes, and avoid inheritance oversights. If you develop your plan now, you and your loved ones won’t have to worry about it during a time of crisis.
You know how people say there are only two guarantees in life, and one of them is taxes? Well, this is about the other. To be clear… death. Most people feel uneasy with this subject, but confronting your own mortality and talking to family about managing finances won’t bring death sooner. Instead, it eases everyone’s stress if you’re organized before a crisis occurs when emotions run high and you don’t have the capacity to focus on complicated financial matters. Are you prepared for a life-changing event where your loved ones need to access financial accounts, legal documents, or medical information on your behalf?
Make the Most of Your Financial Legacy As you get older, you might start thinking about how you can pass your lifetime of collective wisdom, values, and assets to the next generation. Most parents hope their kids will be successful, and in turn also pass wisdom, values–-and wealth to their own children. When it comes to assets, a transfer between generations opens a gaping hole that can swallow much of what you’ve worked for. The transfer gives federal and state tax authorities the opportunity to levy and collect estate and gift taxes, shrinking what’s actually left.
Your Financial Wellbeing Many people take more time and care planning their vacations than their financial and estate plan. They leaf through travel guides and find the best rates online, all in anticipation of a week or two in their future. Because we’re human, planning for short-term fun often trumps long-term gain. We’re not certain about our future—a retirement that we may not have saved enough for, taxes, and risks. Combined, all of this causes us to lose enthusiasm and the courage to devote commitment, energy, and urgency to our planning.
What happens when couples who are working to build their legacy aren’t on the same page about what’s best for their family? How do you bring two different perspectives together? In our practice, we see many kinds of estate planning disconnects. It happens to couples who are happy in their marriage and lifestyle as well as to those who aren’t. So, why the lack of alignment?
There are many myths surrounding legacy planning, but one of the biggest is children fighting over money and possessions. In our practice we find that it’s not things they fight over, but what those things mean to everyone involved. Most of the families we meet with look for fulfillment beyond the material possessions that money affords. Memories, shared experiences, and dreams fulfilled give them more satisfaction. However, when possessions carry many memories, disputes can happen. If you’re a parent or grandparent it’s important for you to consider building your living legacy not only attached to assets, but also to the personal values and memories they represent.