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Are you (and your heirs) ready to take on your share of the historic $59 trillion wealth transfer?

Much has been made of the hard-to-wrap-your-mind-around-it, historic “wealth transfer.” We’re referring to the astronomical $59 trillion that investors (largely boomers) will be passing on to their (largely millennial) offspring over the next 40 years. This seismic wealth shift begs two notable questions: “Are you prepared to pass your hard-earned assets on?” and “Are your children or heirs prepared to receive those assets?”

While answering a simple “yes” is a good start, it is vital to have an actual plan in place beyond a loose notion of the dollars and cents that represent your wealth/value. With so much riding on proper estate planning, big tax implications and messy family dynamics alike, do not leave this to another day that may never come.

We at O’Donnell, Ficenec, Wills & Ferdig are among those consultants that are comfortable working within the very tax and relational dynamics that may prove daunting or too sensitive and “close to home” for you and your family (beneficiaries). We are adept at protecting your estate from being eroded by estate and gift/inheritance taxes. Likewise, our team includes CPAs who have earned designations such as Accredited Business Valuator (ABV) and Certified Exit Planning Advisor. Since businesses may play a part in your estate, and valuations are an essential part of estate and gift planning, it is essential to have “specialists” in these areas. These in-house experts maintain education and memberships on the latest legislative changes that could impact the amount of “wealth” that you ultimately have to transfer, and how well-positioned your beneficiaries are to also protect and sustain your estate and gifts.

Start the conversation

By its nature, estate planning is rife with potential relationship landmines. CPA firms who specialize in these and related areas are familiar and comfortable with facilitating and supporting healthy, productive conversations among family members and other parties. If you have a business, you know how important it is to surround yourself with excellent specialists. Channel this notion in your personal planning. In addition to your accountant/estate planning guru, you may need to enlist an attorney, insurance provider and banker, too. We are accustomed to working in tandem across disciplines to develop plans that account for factors such as assets, objectives and time horizon. In fact, we’ve developed numerous quality relationships “across the aisles” over our 70-plus years of operations. We are happy to enlist or direct you toward experts in other areas as needed. You and your family’s success is our priority, no matter what (or who) it takes.

Additionally, planning will likely involve pinpointing a dollar value to determine the monies that will be available to you in retirement. Naturally, we will need to account for what is going out (expenses) as well as what is going in; the beauty of foresight is we have time on our side to make adjustments that allow for plenty of wiggle-room. This approach also avoids nasty surprises in retirement or so close to it that there is no opportunity to alter the plan and build in more cushion.

We acknowledged the potential for uncomfortable and volatile conversations from the get-go. That is not sufficient reason, however, to shirk “must-have” considerations about life insurance or wills. Some of our readers may have drafted a will a number of years ago. Problem is, you may not have reviewed or updated that document in just as many years. Just like 1980s perms and 1990s bangs, your will may have gone the way of the dodo bird. You need to update it to account for notable changes; for instance, look at the executor. Do you even still talk to this person? If they have since died or you had a falling-out, it is now time to put fingers to keyboard and name a new executor.

Now that we are on the subject, re-review the beneficiaries on all of your accounts. Have changes occurred that necessitate listing a new beneficiary? Life rarely goes as planned. If you don’t review and alter accordingly, an ex-husband or ex-wife may end up with the earnings and assets that you toiled and saved away for! This situation could very well be the definition of “mom or dad rolling over in his/her grave!” Don’t assume that, because your will states all monies within qualified retirement plans should go to the current husband or wife, this process will happen. The will doesn’t matter in these cases. The only thing that matters and is relevant is the beneficiary designated for each of these plans/accounts. Get your beneficiary designations updated, people!

Likewise, considering the depressing stuff now, such as funeral planning, can avoid the really depressing stuff later – like children who are worried about their ability to pay for the final send-off that “mom or dad would have wanted.”

A note on the “kiddos”

Now is an opportunity for the next generation to consider where they are “at” in terms of reaching their goals for retirement, giving and wealth accumulation. Notably, as we go through the process of determining how the estate will be transferred, your children or heirs will have a much better idea of what they have to work with. By that, you can’t move forward if you can’t measure. With information in hand, they are empowered to make smart decisions in how to invest those funds and how to get respective financial ducks in order. It may be advisable, for instance, to pay down debts outstanding first; notably, we’re referring to the student loan debt that, at last check, exceeded $1.57 trillion.

The business piece of the estate plan puzzle

No estate planning process for entrepreneurs would be complete without getting an accurate business valuation from a qualified valuator using an IRS-approved (read: credible) method. It’s quite likely that your business is your estate’s most valuable asset. Knowing this can set the wheels in motion to keep more of your wealth in your family’s metaphorical “pockets” and less in the IRS’s coffers. After all, depending on the determination our valuators make, your estate could be subject to a sizeable tax bill that transcends federal and state exclusion limits. Your heirs could be saddled with a hefty burden. Planning helps to sock away the means to satisfy those liabilities, or can help to minimize the taxes that the estate is subject to. Life insurance can be among those strategies deployed to satisfy estate-related tax debts. As with wills and beneficiary designations for retirement plans, mind your updates! The valuation process should be revisited periodically, especially if your business’s profits are on the upswing and present potential adjustments to valuations that also require adjustments to estate planning and tax strategies.

Regardless of the nature of your assets and the processes that may be required to assure a smooth estate planning and wealth transfer process, we encourage investors to:

  • Collect and organize important documentation now, not later.

  • Assure all parties that should be “in the know” are, and can access those documents if needed.

  • List all assets.

  • List all liabilities.

  • Report, track and update as needed the value of all assets (i.e., this could include everything from jewels to collector’s-worthy items).

  • Retain copies of statements for all investment accounts.

  • Account for insurance policy benefits.

  • Determine how assets may be divvied up.

  • Determine who should get those assets if beneficiaries were to pass.

  • Review wills. Update accordingly.

  • Review retirement accounts and any insurance policies. Update accordingly.

  • Engage with experienced advisors on the establishment of a trust, or other charitable opportunities such as foundations.

  • Name a power of attorney and address health directives. So, your wishes are made known and so the appropriate individual is named to support those wishes and to make sound decisions on your behalf.

We appreciate that estate planning, the very term and process, reminds us of our approaching mortality. A capable and empathetic partner in your corner can make this necessary process so much less taxing, and can set your estate up for success. So, the assets you’ve worked a lifetime for will be transferred as you wish, and your legacy will live on in your family members, heirs and the communities your dollars may support.

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