In our opinion, a crucial step in helping to preserve your wealth is estate planning. This also helps ensure your assets are distributed in the way you want them to be after your passing.
The Importance of Estate Planning
We believe estate planning is essential for individuals who want to ensure that their assets are distributed according to their wishes after their death. It is a way to help preserve your wealth for your family to help ensure they are taken care of when you are no longer there to provide for them. Estate planning involves creating a comprehensive plan that outlines how your assets will be distributed, who will be responsible for managing your affairs, and how your children will be cared for if you pass away.
Without estate planning, your assets may be subject to probate. This process can be time-consuming and expensive, and it may not reflect your wishes. In addition, without a clear estate plan, your family may struggle to manage your affairs, pay your debts, or make decisions on your behalf if you become incapacitated.
Write a Will and Set Up a Power of Attorney
We think one of the most important steps in estate planning is writing a will. A will is a legal document that outlines how your assets will be distributed after you pass away. Be sure to update your will regularly to reflect changes in your circumstances and wishes.
Aside from writing a will, we feel it is also important to make a power of attorney. This legal document allows you to appoint someone to make decisions on your behalf if you become incapacitated. There are two types of power of attorney: healthcare power of attorney and financial power of attorney. Healthcare power of attorney allows someone to make medical decisions on your behalf, while financial power of attorney allows someone to manage your finances.
Take Advantage of Exemptions and Exclusions
Estate and gift taxes can significantly reduce the value of your estate. However, there are several exemptions and exclusions that can help you reduce or eliminate these taxes like federal estate tax exemption. You can also make annual gifts of up to $15,000 per person without incurring gift tax or you can make unlimited gifts for educational or medical expenses if you pay the expenses directly to the provider.
Consider Trusts
Trusts can provide significant tax benefits as they can help reduce the value of the estate subject to gift or estate taxes. Trusts can also help ensure that the business owner’s wishes are carried out in terms of who receives ownership of the business.
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One of the most common types of trusts is a revocable living trust. This type of trust allows you to retain control of your assets while you are alive, but it also allows your assets to pass to your beneficiaries without going through probate.
Another type of trust is an irrevocable life insurance trust, which can help you reduce estate taxes by removing your life insurance policy from your taxable estate.
Schedule a Consultation with Us!
At Cold Harbor Financial, we offer financial strategies designed to efficiently manage the transfer of your wealth to your heirs in an orderly and tax-efficient manner. We create estate plans that are tailored to fit your personal needs. Additionally, having a professional trustee rather than a family member can help remove the emotional component that can often be the source of unnecessary in-fighting within families.
Get in touch with us today to learn more about how we can help you with your estate planning needs.
Opinions expressed in the attached article are those of the author and are not necessarily those of Raymond James. All opinions are as of this date and are subject to change without notice. This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct.
All investments are subject to risk, including loss. There is no assurance that any investment strategy will be successful. Asset allocation and diversification does not ensure a profit or protect against a loss. It is important to review the investment objectives, risk tolerance, tax objectives and liquidity needs before choosing an investment style or manager.
Please note, changes in tax laws or regulations may occur at any time and could substantially impact your situation. While familiar with the tax provisions of the issues presented herein, Raymond James Financial Advisors are not qualified to render advice on tax or legal matters. You should discuss any tax or legal matters with the appropriate professional.
