Posted on: February 1st, 2020
Whether you’re fabulously wealthy or on a path that you hope will get you there someday, you probably need an estate plan.
We notice that some people—even those with significant wealth—assume estate plans are only for people with names like Walton, Rockefeller and Musk. That’s just not the case. Estate plans are for anyone who wants to set up a formal process for transferring assets that are currently theirs to other people in the future.
In other words, an estate plan can create assurances that your loved ones will be adequately provided for, financially, once you are gone. It also can better enable you to support charitable causes that are important to you.
If you care about either of those issues, chances are an estate plan is something you should explore.
Let’s take a closer look at each.
Exceptional estate planning requires exceptional technical expertise about estate planning laws, rules and strategies (some of which can be very complex).
The tools and techniques of exceptional estate planning can range from the basic to the cutting edge. The basics might include the legal strategies and financial products that are readily recognized and generally applicable to many families. More sophisticated solutions could involve discounting and the astute use of financial products in creative ways.
From the technical side, some estate planning strategies and tools you might end up considering include the following:
You can use trusts in all sorts of ways to transfer your wealth and determine how it is to be deployed. Trusts also may be useful in shielding your assets from plaintiffs and creditors. Depending on the kind of trust, there are different tax consequences.
It’s important to recognize that the true goal of exceptional estate planning is to transfer your wealth in accordance with your wishes. Tax mitigation, while often important and beneficial, should not be the overriding driver of your estate planning decisions. The role of an estate planner—who may be a top lawyer, accountant or wealth manager—is to make it possible for you to achieve your desired agenda and to be as tax-efficient as possible in pursuit of that agenda.
That’s where the human element comes into play. While technical expertise is absolutely required, it is the human element—understanding your agenda and designing a plan around it—that separates good estate planning from exceptional estate planning.
That’s because today, the same estate planning legal strategies and financial products are available across the board to any high-end estate planner. So a big difference between plans and planners—and plan outcomes—is the ability to put the pieces together so that you get the results you’re seeking.
Clearly, then, an estate planner you work with should have a deep understanding of you—your situation, your values, your goals and your concerns. Without that knowledge, the tools themselves (good as they may be, technically) might not get you what you want because they’re not the appropriate ones for the job you want done.
Put it this way: A band saw is an effective tool—but you wouldn’t try to hang a picture with one!
Pro tip: Don’t get so wrapped up in any particular strategy that you overlook what you want to achieve and what strategy is best for that goal. And don’t let an estate planner do so either.
There is a process you can follow that we believe can potentially increase your chances of ending up with an exceptional estate plan that satisfies the technical and human aspects (see Exhibit 2).
For each of these possibilities, you need to specify what happens to your assets—life insurance proceeds, property, investments and so on. You’ll also need to decide who is in control at different points in time—making decisions such as when your children will have control of the assets.
It’s very important to recognize that an estate plan—even one that you deem to be exceptionally strong—is not set in stone. A lot in life changes over time. You might become wealthier. The nature of your relationships might change. New tax laws might get put on the books. These and other changes mean that your estate plan should periodically be reexamined and revised, if necessary.
In short, it’s best to think about your exceptional estate plan as perpetually being a work in progress.
If you have any doubts about whether your estate plan is likely to achieve your wishes, consider stress-testing it—that is, have your wealth manager review the plan and your particular personal situation to answer two questions:
Is the plan likely to deliver the outcomes you currently want?
Is the plan missing anything that can make it more effective or efficient?
Ideally, a stress test will reveal your plan is still on track. But if it suggests there are changes that should be made, you can then consider taking steps to realign your plan with your key estate planning goals.
Next step: Contact your financial and/or legal professional(s) to discuss your estate planning goals and the strategies that could potentially help you achieve them.
This report was prepared by, and is reprinted with permission from, VFO Inner Circle. AES Nation, LLC is the creator and publisher of VFO Inner Circle reports.
Disclosure: The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra IS or Kestra AS. The material is for informational purposes only. It represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. It is not guaranteed by Kestra IS or Kestra AS for accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS.
Fusion Wealth Management is not affiliated with Kestra IS or Kestra AS. https://www.kestrafinancial.com/disclosures
VFO Inner Circle Special Report
By Russ Alan Prince and John J. Bowen Jr.
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