Do you feel that your lawyer has already taken care of your estate planning needs?
You might be surprised to learn that proper estate planning requires multiple areas of expertise and very seldom can a lawyer alone do the job properly.
Estate planning is a crucial part of wealth management, particularly if your estate involves significant assets and more complex issues that can create avoidable costs to your estate and challenges for your executor(s). When properly structured, an estate plan can reduce the taxes and expenses related to your estate, simplify and speed the transition of assets to the next generation and ensure that your beneficiaries are protected.
It is about much more than just having a will.
So what can we do to help you properly plan for the transition of your estate?
Step 1: We document an inventory of your assets and liabilities.
This initial stage involves creating a full list of all of your assets and liabilities including real estate, investments, accounts, valuable personal property, and details of any businesses you may own. The cost to purchase or set up these assets (known as the Adjusted Cost Basis or ACB) is also an important detail necessary to calculate potential future tax liabilities. We would also need to review your recent tax return(s) to document details of carry-forward capital gains and losses. It is also wise to document the location and pertinent details regarding your personal documents. These include:
- Will(s) and Power of Attorney for property and personal care
- Birth and marriage certificates
- Marriage contracts
- Buy-Sell Agreements for Corporations you own
- Insurance policies
- Real estate deeds
- Location of safety deposit boxes
- Details of pre-planned funeral arrangements
- Location of trust documents
- List and contact information of your professional advisors (financial planner, lawyer, accountant)
- Names and addresses of executor(s)/trustee(s) and beneficiaries of your Will and trustees for your children if any
Step 2: We define your objectives and goals for your estate.
Once we have detailed the assets and liabilities involved in your estate, we need to define your goals both personal and financial. Using these, we can make specific recommendations to achieve these goals the best way possible.
- Who will be the beneficiaries of your estate and in what proportions?
- What will be the impacts on family dynamics and relationships?
- Who would you trust to manage your affairs and follow your wishes? Are they qualified?
- What lifestyle would you want to provide for your immediate family if you passed away?
- Are there significant family assets that will need to be dealt with?
- Is minimizing income tax and probate taxes important to you?
- Do you want your beneficiaries to receive their inheritance immediately or do you want it delayed or with any controls?
- Do you wish to donate any of your estate to charities?
Step 3: We design and evaluate your estate plan.
The team at Lighthouse Wealth Management will design a plan to achieve your goals and help you organize your estate. Together with the aid of your lawyer and your accountant we can either review your existing will or help you create a will and Power of Attorney, consider the value of using trust structures or estate freezes to protect your estate and your family, review and discuss tax planning tools and strategies, and recommend appropriate products where necessary to complete the plan. For our business and farm owner clients, special attention must be paid to corporate share structures, exit strategies and tax implications. Investments and life insurance must also be structured properly using the appropriate financial products and having the correct beneficiaries in place. Once the initial plan is created we will review it with you and make adjustments if necessary before it is implemented.
Step 4: We help you implement your plan.
This is decision time. You may have already chosen to work with the Lighthouse Wealth team, however if not you must first recognize the value of choosing the right professionals to manage your wealth. Although your lawyer is necessary to perform some of the legal aspects of your estate planning, it is crucial that you include a Certified Financial Planner to actually create your plan. Your chosen team must be licensed and educated for both the insurance and investment industries, with experience in the banking world to be qualified to assist you with your estate plan. They should be knowledgeable in tax planning, legal issues, insurance and investments, and have the required professional designations such as a CFP and CLU designation. Many “advisors” out there are actually sales representatives and may not be recommending what is in your best interest or be qualified to provide financial advice. Our team at Lighthouse is fully qualified for this role with partners that possess all of the required designations and licenses.
Once you choose your estate planer, and you have become comfortable with your estate plan recommendations you will likely have to make changes to where your investment assets are held, apply for life insurance if needed, and meet with your other professionals to finalize or update your important legal documents. Our team can also assist you by introducing you to trusted professionals in your area that are experts in their field.
Step 5: We Monitor and Review Your Plan.
Once your plan is in place, we will periodically review what is in place to ensure everything is still appropriate to your goal set. Your goals may change, tax and legal implications may have changed, and new strategies may become available. Regular review and updates keep your estate plan current so that when the time comes, it will provide for the most effective transition to your loved ones or the causes that you believe in.