Managing Wealth: Estate Planning Tips

The stock market is tough to keep track of on your own. It can be hard to read, difficult to understand, and, sometimes, downright finicky. It’s why investors are encouraged to work with an experienced financial advisor who works to leverage their expertise in the industry as a guide for clients.

The same can be said for estate planning, particularly for individuals who have reached a certain level of wealth. Investors’ financial commitment to the market varies from person to person — almost along a spectrum — which means concerns and questions from investors at different levels of financial commitment to the market will also vary. 

It’s why it’s vitally important for investors at every level to foster a genuine relationship with a financial advisor they know has their best interests at heart. With that relationship in place, estate planning becomes easier, especially when potentially challenging decisions come into play.

Whether an investor has experienced some type of liquidity event, such as the sale of property or an inheritance, or if they have slowly built their wealth to a certain level over the years, estate planning is an exercise designed to protect and maximize an individual’s wealth.

Here are a few tips for estate planning as a means of managing wealth.

Forecast estate taxes.

Those who desire to leave their accrued wealth to their loved ones will no doubt encounter questions and hurdles related to estate taxes which, if not addressed, can really siphon significant value from an estate. For example, estates valued in the multi-millions of dollars need to be aware of the current ceilings for taxable gift exemptions, or those who inherit the wealth could be subject to a 40% tax. The same goes for a tactic known as generation-skipping transfers.

Make a plan for incapacitation.

Estate planning involves the critically important step of looking ahead to what could be possible from a health perspective, and giving a written directive should certain circumstances arise. It avoids the possibility that an investor’s wealth could be spent on unwanted healthcare initiatives. This process involves appointing a power of attorney, and possibly a healthcare power of attorney, to manage matters according to directives stated in a living will. 

Create a revocable living trust.

Estate plans that include a living trust will allow those who manage disbursement of the wealth following the death of the investor to avoid the tedious and costly probate process. Revocable living trusts can also be amended or modified at any time. A trusted advisor will also guide investors on the tax advantages of moving assets into and out of the trust. In addition, distributions can be set up in accordance with your wishes.

Estate planning can seem complicated, but with the right team of advisors, it becomes easier. Either way, it’s a necessary exercise, especially for those who have achieved a certain level of wealth. It’s crucial to involve an Estate Planning Attorney in evaluating your options, as a clear line in the sand exists between financial and legal advice. 

At Rosevest Financial, we’re happy to answer any questions you have about estate planning or investing without the pressure of commitment. 

Everyone’s needs are unique. Contact us so we can answer your questions and discuss your specific investment needs.