While conversations about estate planning may not be at the top of your list, it is an essential process to ensure that your wealth is distributed as you wish.
“If people don’t plan ahead for the distribution of their wealth when they pass away, it can cause chaos,” Manning Elliott partner Abbe Chivers says.
“The tax implications can be significant without proper planning, and the stress for the family, who is dealing with loss and not knowing how the person wanted their estate to be dealt with, would be difficult.”
Chivers, a long-standing member of Manning Elliott’s team, helps her clients plan for the future through estate and wealth planning.
Having conversations with your family about what kind of legacy you want to leave is important, Chivers says. It is especially so if you own your own business. It is crucial to consider succession of the business as you plan for the future, whether that means training the next generation to take over, or preparing the business for a sale.
When starting your estate planning, Chivers advises clients to consider these five things:
Make sure you have a will
It goes without question that you should have a will that identifies your wishes for your estate, but also make sure you take the time to discuss your plans with your family. Don’t forget to update your will as necessary.
“Any time there is a significant event or change in your life, you need to revisit your will,” Chivers says.
This could include the birth of a new grandchild or purchasing a vacation property. As your family and assets change, your will should be updated to reflect your circumstances.
Choose the right executor
“An executor is the person who is going to carry out your wishes and ensure they are fulfilled,” Chivers says.
“You want to be sure that whoever you choose will be able to do what is necessary.”
Your executor can be a family member, an institution that offers those services or a friend. The key part, Chivers recommends, is ensuring that whoever you’ve chosen is up to what can sometimes be a long and arduous task of distributing the estate and ensuring your estate’s financial responsibilities have been met.
What do you want to leave as a legacy
If you’ve been very involved with a charitable organization, you may want to leave a part of your estate to that organization.
“If the individual has a sizeable estate, it’s really important that they designate how much and where they want that contribution to go because it could affect the final taxes payable,” Chivers says.
Your desired contribution doesn’t necessarily need to be indicated as a dollar amount, it can be a percentage of your estate. Either way, it must be specified in your will to be eligible as a tax benefit.
Consider tax implications
“If you have a large estate, your final tax bill could be significant,” Chivers says.
While anything left to a spouse when you pass away is not taxable, the portion of your estate left to anyone else is.
“If there’s a tax bill, you should consider where the funds will come from to pay it. Can you reduce it?” Chivers asks.
Often people take out life insurance to cover their estate taxes. Chivers recommends people look into that as soon as possible, since life insurance premiums get more expensive the older you are.
Seek out a tax advisor to walk you through the tax implications of your current estate.
Consult with professionals
“Manning Elliott is able to assist our clients with a plan and provide them ideas to help make transition to their heirs easier and less costly,” Chivers says.
While anyone can write a will, she recommends using a legal professional to ensure it’s drafted in a way that accurately reflects the client’s wishes.
For trusted, customized services to meet all your financial needs, visit www.manningelliott.com.
