How to Optimize Your Estate Plan

April 30, 2014

In estate planning, there is definitely a large gap between how much importance one places on ensuring family security and what one does to “actually” ensure that security. In a recent survey, U.S. Trust revealed that most wealthy families have an estate plan in place, but only 39 percent indicated that they feel secure about the comprehensive nature of their plan to distribute their wealth.

Over the past century, wealthy individuals have given more emphasis on goals such as financial security and financial freedom for themselves and their family. They’ve allocated resources for extensive travel after retirement and focused more on quality relationships with family and friends; besides simply leaving a financial inheritance. Moreover, concerns over their heirs’ ability to handle large inheritances have made most people hide the true value of their estate from their children, says the survey.

April-Blog-4---Image-pyramidOptimize Your Estate Plan to Ensure Your Goals
If you are focused on providing on-going financial security to your loved ones, then your estate plan should have specific provisions than simply addressing tax issues. In fact, the objectives of the estate plan should give priority to the issues according to the following pyramid.

Financial Security
It is a must to define who will receive which assets, how much each person or entity will receive and how the wealth will be distributed in an estate plan.

Estate Protection
Providing clear guidelines for protecting the estate should be the next priority. Such protection may be required from creditors and potential lawsuits, former family members or members you want to exclude from inheriting any assets you leave behind.

Management Continuity
The next priority should be ensuring who will be taking care of the estate, or play the managerial role. Is there a necessity for a trust or similar entities? If there is, then considering different types of trusts, such as revocable and irrevocable trusts, life insurance trusts and charitable trusts to serve each of your different goals may help optimize the purpose of the estate plan.

The last priority of the estate plan should be the tax burdens because leaving a legacy is more important than saving the tax bill. It doesn’t matter if the size of your accumulated wealth is a billion or only few hundred thousand dollars, leaving a legacy to your family and community is the ultimate prize of having an estate plan in place.

At HFG Wealth Management, we understand the importance of planning for generational wealth transfers and the hurdles you may be facing. If you would like guidance in this process, please call us and we will work with you and your estate planning attorney to ensure your true goals are reflected in your estate plan.

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