Compass Point Retirement Planning, Inc.

Wealth Transfer

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Generational Wealth Transfer

After a lifetime of hard work and accumulation of assets, proper planning is a key to your estate being distributed as per your wishes. Far too often smart, successful people do not spend the time to put the documents in place needed to protect their assets from taxes, creditors, and even members of their family that are not capable of handling large sums of money all at once.

At a basic level, the goal of estate planning is to expedite or avoid the probate process altogether. Probate is a fancy term for the legal process that occurs after a person passes away. The probate court system must first validate that the will is authentic and then proceed to distribute the estate among the heirs. When a person leaves no will, the probate court must decide according to the laws of the state, who gets what. Probate is an expensive process and can take anywhere from a few months to a few years, depending on how complicated the estate is.

It is important to draft a Will. A Will is a legal document that lets you tell the world who should receive which of your assets after your death. It also allows you to name guardians for any dependent children. Without a Will, the courts decide what happens to your assets and who is responsible for your children. Wills do have limitations; in particular, the beneficiary designations on financial accounts, insurance policies and other assets take precedence over wills. It is important to make sure your beneficiary designations are up to date and reflect your wishes.

If you want to spare your heirs the hassle of probate, there are a few ways to avoid the process, such as a Trust. A Trust is a legal entity that lets you put conditions on how certain assets are distributed upon your death. Trusts can also help minimize gift and estate taxes. If you have a net worth of at least $100,000 and have a substantial amount of assets in real estate, or have very specific instructions on how and when you want your estate to be distributed among your heirs after you pass, then a trust could be for you. Trusts are also great for minimizing estate taxes or protecting your estate from lawsuits and creditors. The most common use for wealth transfer is Revocable Trusts and Irrevocable Trusts. Revocable Trusts allow you to retain control of all the assets in the Trust, and you are free to revoke or change the terms of the Trust at any time. With Irrevocable Trusts, the assets are no longer yours, and typically you can’t make changes without the beneficiary’s consent. However, the appreciated assets in the trust aren’t subject to estate taxes.

Trusts are flexible, varied and complex. Each type has advantages and disadvantages, which you should discuss thoroughly with your estate-planning attorney and advisor before setting one up.

You may also want to continuously update the Trust – for example, to change beneficiaries or investments. Consult your lawyer every few years to make sure your trust remains up to date.

Contact us to learn more or with any questions you may have regarding Wealth Transfer.

Some estate planning and tax services may be offered through a qualified third party. NPC does not provide tax or legal advice. Estate planning can involve a complex web of tax rules and regulations. Tax laws surrounding estate planning concepts are subject to change please consult an estate planning attorney prior to making any financial decisions.

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