Legacy Planning – Thinking About the Next Generation SHP Financial

You’ve probably passed on pieces of wisdom to your children, but have you considered how you’ll pass on your wealth? Now that you’re reaching a certain age, you may be wondering how you’ll pass on family heirlooms, property, or the wealth you’ve built over many years. Proper legacy planning could be one of the greatest gifts you give your loved ones. However, you may be delaying the process of creating an estate plan because you’re thinking, “Where do I start?”

There are complicated tax laws regarding estate planning, not to mention all the changing laws that are hard to keep track of. With the Biden administration eyeing a “wealth tax” in a recent tax plan proposal,[1] it could be more important than ever to have a comprehensive plan for the transfer of your estate to your loved ones.[2] Here are the basics to get you started.

Wills and Trusts – What’s the Difference?

Let’s look at the key differences between wills and trusts. A will is a legal document that ensures your estate is distributed the way you wish after your passing. A trust is an arrangement with a manager, or “trustee”, by which your estate is taken care of in your interest. A trust goes into effect when you create it, not after you pass away. But a will must pass through court to ensure efficacy and legitimacy.[3]  This means that wills make sure that your estate is distributed as you wish, and a trust often provides a manager and a legal “place” to store and manage your estate.

Don’t Forget About Taxes

It’s also important to consider how your wealth will be taxed when it’s passed on to your loved ones. Assets can receive a setup in basis so that beneficiaries pay less in capital gains tax. In addition, a partial or full Roth conversion can potentially help minimize taxes for heirs. Another tax minimization strategy is having a life insurance policy set up to distribute to your beneficiaries potentially tax-free depending on the structure of the policy.

The SECURE Act

The SECURE Act is a comprehensive piece of legislation that could have a major impact on your estate plan. A key takeaway from this legislation is that it eliminates the “Stretch IRA” strategy that has commonly been used to transfer wealth to beneficiaries in legacy planning. Instead of being able to take distributions when they want, most non-spouse beneficiaries must empty inherited accounts within ten years. We can help you understand how you’re affected by this new rule and how you can revise your estate plan.

This conversation only scratches the surface. With changing rules and regulations that can get in the way of giving your beneficiaries the gift of proper legacy planning, it’s more important than ever to consult with a financial advisor. The first step is to Click HERE to sign up for a time to speak to us at SHP Financial about your financial goals.

[1] https://www.forbes.com/sites/robertwood/2022/04/27/bidens-scary-death–wealth-tax-plans/?sh=16c5715458b0
[2] https://www.forbes.com/sites/martinshenkman/2022/04/03/biden-greenbook-estate-tax-proposals-should-you-care/?sh=3c86206e3a12


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Investment Advisory Services are offered through SHP Wealth Management LLC., an SEC registered investment advisor. Insurance sales are offered through SHP Financial, LLC. These are separate entities, Matthew Chapman Peck, CFP®, CIMA®, Derek Louis Gregoire, and Keith Winslow Ellis Jr. are independent licensed insurance agents, and Owners/Partners of an insurance agency, SHP Financial, LLC.. In addition, other supervised persons of SHP Wealth Management, LLC. are independent licensed insurance agents of SHP Financial, LLC. No statements made shall constitute tax, legal or accounting advice. You should consult your own legal or tax professional before investing. Both SHP Wealth Management, LLC. and SHP Financial, LLC. will offer clients advice and/or products from each entity. No client is under any obligation to purchase any insurance product.