Legacy & Estate Planning
Rest Easy with a Legacy & Estate Plan
If you are like many retirees, you want your estate and financial affairs in order at the end of your life. Maybe you created a living will, named an executor, and made some plans for your assets. In that case, you expect those assets to pass to your beneficiaries according to your wishes. But what of your legacy, the broader scheme of how you want to leave this world and the people you love? At SHP Financial, we help you assemble a team to design a thorough legacy plan that protects your wealth, preserves your values, minimizes taxes, and prepares for a seamless transition of assets. Legacy planning is the fifth and final step in our Road Map process.
Legacy Vs. Estate Planning
- Last will and testament
- Power of attorney
- Advance directive
- Revocable and irrevocable trusts
Estate planning concerns tangible items and is the vehicle for implementing a legacy plan. A comprehensive estate plan simplifies a process that can otherwise be painful, time-consuming, and costly.
- Charitable giving
- Tax-efficient transfer of wealth
- Clear and conflict-free distribution of assets
- Business succession
Avoiding Probate
Ideally, upon an individual’s passing, their wealth transfers instantly, tax-efficiently, and outside of probate to their beneficiaries. Probate is a court-administered system that ensures the orderly distribution of assets after death. However, there are many reasons to avoid probate. It’s an expensive legal process that typically requires lawyers to bill hourly. Creditors and various government agencies can also take their cut of the estate, further diminishing assets. It’s time-consuming, taking months or even years to resolve. Despite popular belief, assets that go through the probate court system will not automatically pass on to beneficiaries, even if there is a will. Which begs the question, how can you avert the probate system with your legacy plan?
Designate Beneficiaries
A beneficiary is a person who will assume ownership of an asset after a passing. A probated estate does not include assets with beneficiary designations, allowing them to pass to their intended recipients.
Title Assets
Titling denotes how a beneficiary will own an asset, for example, individually, jointly, via trust, etc. Properly titled assets avoid contest and confusion.
Confirm that Beneficiaries are Current
Things can change with time. Certify that your plan aligns with your intentions by keeping legacy documents up-to-date.
Establish Trusts
Not all asset classes allow the naming of a beneficiary, for example, property. Trust property is not part of a probated estate because a trustee, not an individual, owns it. A trustee can easily and quickly transfer property outside of probate after the grantor’s death.
Gift Assets
Gifting while alive helps an estate avoid probate after death if the asset is below the gift tax threshold. It can also help reduce potential probate costs since greater asset values yield higher probate expenses.
Hire an Estate Planning Attorney
Consider working with a qualified estate planning attorney. It may be beneficial to avoid attorneys who handle estate planning and probate to prevent a conflict of interest should your estate end up in the probate system.
Life Insurance and Irrevocable Life Insurance Trusts (ILITs) in Estate Planning
Life insurance adds value to an estate plan. It can provide immediate cash for heirs to pay death taxes, debts, burial expenses, and other settlement debts. However, life insurance proceeds can be subject to federal and state estate tax.
That is where ILITs come into play. ILITs are a way to ensure life insurance proceeds avoid estate taxes and follow the interests of the insured. ILITs also provide a cash source for heirs to pay estate taxes on assets such as property, businesses, or other items of value or to pass wealth to heirs tax-free. An ILIT can provide several benefits, but this complex legal arrangement requires a professional to set up and administer it correctly. An experienced financial planner can determine your needs for life insurance and assess the types of policies that may suit your estate.
SHP Financial’s Approach to Legacy Planning
Our team of advisors at SHP Financial can help you avoid missteps by taking an all-inclusive approach to legacy planning. In addition to preserving your wealth, we believe a solid legacy plan honors your values, priorities, and vision. In connection with a qualified estate planning attorney, we’ll protect your requests and your beneficiaries with a legacy plan tailored for you employing these principles:
Legacy Planning Strategies
We work with estate planning attorneys to put wills, trusts, and other legal instruments in place. This includes funding the trusts and properly updating beneficiaries. We explore ways to help reduce your taxable estate and provide for your heirs.
Tax Optimization
Estate taxes can significantly erode the value of the assets intended for your beneficiaries. With today’s property values, it’s becoming easier for retirees to hit the tax threshold, especially in states like Massachusetts, where it is lower than the federal tax threshold. When that happens, heirs pay taxes on the money they inherit. We employ tax-efficient strategies to maximize wealth, reduce the tax burden on your heirs, and protect your assets from creditors and lawsuits. Using gifting tactics, trusts, charitable planning and other methods, we help your estate circumnavigate and minimize tax liabilities like capital gains.
Family Governance
Our legacy planning approach incorporates governance structures to prepare family members and beneficiaries to manage their inherited assets responsibly.
Ongoing Reviews
We take a proactive approach to legacy planning, and since life is dynamic and ever-changing, we expect variations in your finances and adjustments to your legacy plan. We ensure through regular reviews that your plan reflects your vision for today and the long term.
Start planning your legacy today. No one wants to prepare for death, but legacy planning is essential to avoiding problems after you pass. Our SHP Financial team is your trusted partner in legacy planning with decades of experience and a commitment to servicing our clients. With trust and tax fluency, our advisors can guide you on the financial aspects of your legacy journey to leverage your wealth and positively impact future generations.
Start Journey to Retirement NowOur Clients' Experiences
All of the following testimonials are from current SHP Financial clients, and no compensation has been given for their statements.
