A staggering $84 trillion will switch ownership from now till 2045, according to a report from Cerulli Associates. Though nearly $12 trillion of that will go to charity, the rest will be transferred directly to heirs.
Summer isn’t just a time for sunshine and travel — it’s also when families come together, making it the perfect time for conversations that matter the most.
As your family gathers over the next few months, it creates an opportune time to engage in conversations about estate planning and ensure you, your assets, your family and your legacy are protected.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
The Kiplinger Building Wealth program handpicks financial advisers and business owners from around the world to share retirement, estate planning and tax strategies to preserve and grow your wealth. These experts, who never pay for inclusion on the site, include professional wealth managers, fiduciary financial planners, CPAs and lawyers. Most of them have certifications including CFP®, ChFC®, IAR, AIF®, CDFA® and more, and their stellar records can be checked through the SEC or FINRA.
Understand what you own and how assets transfer
There is no sense of growing your estate if it will just be eaten up by income taxes, so it’s paramount that you understand what investments you own today and how they transfer to loved ones upon passing.
It’s common to think, “I have a living trust. Everything will be fine.” However, this is not true because not all assets pass through a living trust and can’t be registered in a living trust.
Additionally, not all assets are taxed the same way, so you need to understand not just how they pass on to loved ones but how they will be taxed to them.
Build a thoughtful estate plan
Once you know your investments and understand how they transfer upon passing, it’s essential to create a will to name beneficiaries and guardians for any minor children.
Different states vary on the types of will that are valid, so it’s important to understand the applicable laws.
A complete estate plan includes a living trust, an advance directive for your medical care wishes, a designated power of attorney, a pour-over will and more.
Keep your plan up to date
Estate planning is fluid and dynamic and needs to have eyes on it at all times.
The first thing you should do is check to see if your living trust is up to date with the current laws. It makes sense to check in with the person who put together your trust every few years to ensure it’s up to date.
The second step is to gather the statements of your investments that should be in your trust to confirm that they are.
These assets include checking, savings and CD accounts, as well as investment accounts that are not registered in the form of a retirement account, such as an IRA, 401(k), 457 plan, etc.
Assets in retirement, annuity and life insurance accounts are passed down through a beneficiary designation. Periodically check and update these beneficiary designations as needed.
Looking for expert tips to grow and preserve your wealth? Sign up for Building Wealth, our free, twice-weekly newsletter.
Print copies of these financial statements and store them in a safe place. It’s smart to also scan them to your computer so they are saved digitally.
Finally, ensure that other family members know where these documents live in case they need access.
Re-evaluate and discuss
As life circumstances change, make time to update your estate plan and discuss the updates with your loved ones.
Honest conversations with loved ones about the elections you made help to ensure a smooth transition. Losing a loved one is difficult, and conversations ahead of time can help limit any conflict between beneficiaries regarding assets.
Conclusion
These steps ensure that your assets are passed on to loved ones in an efficient and protected manner.
While you gather with loved ones this summer, use that time to have important planning conversations. The most important part of an estate plan is getting started — and there’s no better time than now.
Related Content
- How (and Why) to Talk Money at Your Family Dinner Table
- 18 States With Scary Estate and Inheritance Taxes
- What Is a Good Inheritance? Six Great Assets to Inherit
- Give Now or Leave an Inheritance? How to Balance the Options
- Ten Common Estate Planning Mistakes
-
Ask the Editor — Tax Questions on What Congress Will Do NextAsk the Editor In this week's Ask the Editor Q&A, we answer questions from readers on what Congress will do next with taxes.
-
When Tech is Too MuchOur Kiplinger Retirement Report editor, David Crook, sounds off on the everyday annoyances of technology.
-
Bonds Pay in Good and Bad TimesBonds can act as a financial safety net through good times and bad. But different bonds carry different returns and risks, so do your homework before investing.
-
When You Need Capital Quickly, Think 'Ready, Set, Fund': A Financial Adviser's StrategyInvestors must be able to free up cash to meet short-term needs from time to time. This strategy will help you access capital without derailing your long-term goals.
-
I'm an Estate Planner: Moving Family Assets to a Safe Haven Abroad Could Be a Huge Headache for Your HeirsIn troubled times like these, wealthy clients may seek financial refuge outside of the U.S. But that could cause more tax and estate problems than it solves.
-
S&P 500 Extends Losing Streak Ahead of Powell Speech: Stock Market TodayStocks continued to struggle ahead of Fed Chair Powell's Friday morning speech at Jackson Hole.
-
The Emotional Side of Retiring: Six Steps to Help You Move OnGetting mentally ready for retirement can be tough. The loss of your work identity, daily connections, and sense of purpose can make the transition difficult. Here are six steps to help you adjust.
-
A Timeline of Warren Buffett's Life and Berkshire HathawayBuffett was the face of Berkshire Hathaway for 60 years. Here's a timeline of how he built the sprawling holding company and its outperforming equity portfolio.
-
What Will Powell Say In His Jackson Hole Speech?Fed Chair Jerome Powell will likely walk a fine line in his Friday morning speech at the Jackson Hole symposium, but Wall Street is hoping for rate-cut clues.
-
Protect Your Retirement From Extreme Weather EventsA rising tide of storms, fires, and heat is impacting retirees. Here's what you can do about it.
