estate planning

Estate planning is an important part of retirement planning for many reasons: You’ve worked hard for your money and want to see it passed down in the most efficient way possible for your loved one’s benefit. Unfortunately, costly mistakes are all too easy to make. Without careful planning and discussion, you could end up passing on a larger tax burden and leaving heirs uncertain about what to do. It’s important to discuss how you plan to transfer your wealth with your trusted financial professional and your loved ones when preparing the next generation to inherit wealth.

Create or Review Your Estate Plan

It’s important to regularly review your estate plan and update it when there are major life changes like the birth of a new beneficiary, marriage, divorce, or when beneficiaries become eligible to receive money. Many people may not know that their will does not control who inherits all of their assets, such as retirement accounts, life insurance, and annuities. In order to pass these on, you must name a beneficiary for each retirement account, insurance policy, and annuity.

Consider Tax Minimization Strategies

You’re likely thinking about tax minimization in 2020 and beyond for yourself, but what about your heirs? Some of the same strategies could also potentially help minimize their tax burdens. Talking with your loved ones about how inheriting money could affect their taxes is one way to start the conversation about wealth transfer. You may have the option to convert funds from a traditional IRA, 401(k), or similar qualified retirement account into a Roth IRA. In this case, you would pay tax on the funds converted and then be able to withdraw them tax-free later on.[1] Consider that the Tax Cuts and Jobs Act lowered tax rates and will expire at the end of 2025.

Discuss What Heirs Plan To Do With Money

Communication is crucial when preparing heirs to inherit wealth, and this includes discussing what they plan to do with money and how they can handle it responsibly. A “DIY” or “do it yourself” mentality has spread from the realm of home improvement to finance. And while it’s good for younger generations to educate themselves on their finances, they may run into trouble when investing on their own. Online stock trading platforms have become popular,[2] and younger users may only see the upsides to day trading on their own and fail to understand the complexities of investing, such as diversification and rebalancing. There is also likely a fair amount about our complex tax code they don’t fully understand.

When preparing the next generation to inherit wealth, neither you nor your heirs need to go the DIY route. We’re trusted financial professionals who can help you create a comprehensive retirement plan where your retirement income plan, tax minimization strategy, and estate plan all work together. Get in touch with us to find out how we can help you create a financial plan for your retirement and the future.



The content presented is for informational purposes only and is not intended as offering financial, tax, or legal advice, and should not be considered a solicitation for the purchase or sale of any security. Some of the informational content presented was prepared and provided by Lone Beacon Media, LLC dba Lone Beacon, while other content presented may be from outside sources believed to be providing accurate information. Regardless of source no representations or warranties as to the completeness or accuracy of any information presented is implied. Lone Beacon Media, LLC is not affiliated with the Advisor, Advisor’s RIA, Broker-Dealer, or any state or SEC registered investment advisory firm. Before making any decisions you should consult a tax or legal professional to discuss your personal situation.

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.