Estate Planning Essentials for Creating a Legacy of Financial Stewardship

Estate planning is an essential consideration for high-net-worth families who want to create a legacy of financial stewardship. 

By taking steps to protect and preserve your wealth, you can ensure that your loved ones are taken care of in the event of your death or disability. An estate plan can also minimize taxes and maximize the value of your assets. The following are some essential estate planning considerations for high-net-worth families.

But First, What Is Estate Planning, And Why Is It Essential for High-Net-Worth Families?

Estate planning is essential for high-net-worth families to ensure that their assets are distributed according to their wishes after they pass away. 

This process includes financial planning, creating wills and trusts, appointing people to manage your assets, and facilitating a smooth transfer of wealth from one generation to the next. Estate planning can also involve tax minimization strategies and critical estate documents that appoint guardianship for minor children. 

By engaging in estate planning now, families have access to modern options to protect and preserve their hard-earned assets and grow their wealth while also providing them peace of mind knowing that their intentions will be followed upon their passing. Our team of advisors is available to help walk you through the process step by step so you can create a lasting legacy for generations to come.

What Are the Most Important Documents in Your Estate Plan?

While every situation is unique, there are a few estate planning documents that almost everyone will need.

They are:

• Will or trust. There are many types of wills and trusts, but the right one for you will depend on your unique situation. This is where it can be very beneficial to speak with an experienced financial advisor to help point you in the right direction and understand what’s right for you and your loved ones. 
• Power of attorney. This document authorizes someone to act on your behalf in financial or legal matters. It comes in different types, known as durable, springing, or general, each with unique considerations. For example, a general power of attorney is effective immediately but ends if you become incapacitated or die. Alternatively, a durable power of attorney remains operational through incapacitation but also expires after death. Lastly, a springing power of attorney is not effective immediately but springs into effect at a future date if you become incapacitated or declared incompetent. Knowing the right option to use is essential when designing your estate plan.
• Advance healthcare directive. This document allows you to specify any specific wishes or healthcare preferences you have if you cannot make decisions for yourself. It’s often referred to as a “living will” and allows you to designate a “Healthcare Agent” who can make decisions on your behalf in the event of a worst-case scenario. In addition, your advance healthcare directive can include your preferences for end-of-life decisions, such as when to be given life-sustaining care and treatment. 
• Beneficiary designations. Next, certain assets like retirement accounts or life insurance proceeds have their own beneficiary designations that allow you to specify who will receive the assets after you pass. This means that you must be diligent about filling out and updating the beneficiary designations for these accounts. In addition, there are specific tax implications when passing retirement accounts to your beneficiaries, so be sure to consult with a financial advisor when determining your wishes.
• Guardianship designations. Lastly, if you have minor children, you can appoint a guardian within your will. This allows you and your spouse to decide who would care for your children in the event of your death or incapacitation. Alternatively, if you don’t specify a guardian, the courts will appoint one when you pass.

The Role of Trusts in Your Estate Plan

Estate planning is essential to managing your family’s wealth, and one way to do this is to create a trust. 

With a trust, you can designate how your assets should be managed and distributed upon your passing. 

However, there are many different kinds of trusts you may consider. 

For example, revocable trusts allow you to easily change or alter the terms of the trust during your lifetime, while irrevocable trusts are more difficult to modify and are used for tax benefit purposes. Alternatively, testamentary trusts become active upon the death of an individual and are outlined as part of your last will and testament. A comprehensive understanding of these different types of trusts can ensure that you’ve covered all your bases and ensure that your estate plans accurately reflect your wishes even after you’re gone.

Appointing The Right People In Your Estate Plan

When it comes to estate planning, appointing the right people is critical.

While your executor will manage your assets and carry out the terms of your will upon your death, a Trustee will handle the wishes outlined in your trust. Additionally, your appointed Guardian will care for your minor children, while your agent will be able to execute financial and legal documents on your behalf as outlined in your power of attorney documents.

Therefore, selecting people you trust with the knowledge and experience to handle such responsibility is essential. When considering who should be part of your estate team, choose those familiar with financial matters and estate planning laws but who are also aware of your desires and views on life. 

Tax Considerations In Estate Planning

Estate planning is essential for high-net-worth individuals to ensure their money and assets are handled efficiently. 

A crucial part of this process when working with a wealth management advisor is considering the various tax implications involved, which can be complex and challenging. In addition, a clear picture of how current taxes will affect future generations is fundamental for those with multiple generations to consider. Building an effective estate plan requires understanding these nuances and thorough knowledge of the ever-changing tax laws, which our financial advisors have extensive experience navigating. 

TrueNorth Wealth Is Here to Help

TrueNorth Wealth is here to provide assistance to those who are interested in working with a CFP® professional that operates as a fiduciary. We can help you develop a personalized investment portfolio and discuss your unique estate plan to achieve your financial goals. 

As one of the leading wealth management firms in Utah and Idaho, with offices in Salt Lake City, Logan, St. George, and Boise, our focus is on helping our clients build long-term wealth while enjoying their financial resources to the fullest. Our team of dedicated CFP® professionals, backed by a fantastic support team, works with clients to help them achieve their financial objectives. 

Our ultimate goal at TrueNorth Wealth is to assist families throughout Utah in achieving the freedom and flexibility they need to live their lives to the fullest. To find out more or schedule a consultation at no cost, please get in touch.