Estate planning is the final step in the PRETIRE program. It is the process by which people plan for the ultimate disposition of their assets when they die. If this process is executed properly, assets are transferred effectively (to the people or organizations the decedent desires) and efficiently (without delays or excess cost).
During the early stages of life, our focus is on asset accumulation and asset preservation. As we get closer to our life expectancy, the focus shifts to asset disposition. We want a way to pass on our hard-earned wealth to our loved ones as part of our legacy. Similar to the tax component of the program, estate planning is extremely complex. The execution of a plan is riddled with legal jargon and subject to two additional U.S. tax systems, the gift/estate tax system and the generation-skipping tax system. All of this is outside the scope of knowledge of most individuals.
In addition, there are a necessary set of legal documents that every person should have in place to handle financial and healthcare matters in the event of their incapacitation. The documents are essential for having your wishes executed when you're not able to make decisions for yourself, yet most people don't take the time to file the necessary documents. Our program will tell you what documents you need and how to get them filed.
We accomplish estate planning by first understanding your transfer goals and wishes, and then creating a strategy for accomplishing them effectively and efficiently. This strategy will address:
Minimizing your taxable estate when you die so that you pass more to your heirs and less to the government.
Maximizing the use of your estate tax credit.
Implementing gifting strategies during your lifetime to transfer wealth tax-free using annual gifting exclusions.
Generation-skipping tax implications.
Proper titling of assets so they pass directly to your heirs and avoid probate.
The use of revocable and irrevocable trusts to transfer assets as you wish and force your heirs to use those assets in the manner you prescribe (i.e. children receive money, but can't touch anything more than the income until age 25 unless it is used for health or education).
The use of life insurance to create liquidity at the time of death without adding to the taxable estate.
Necessary legal documents:
Will
Side Letters of Instruction
Durable Healthcare Power of Attorney
Durable Financial Power of Attorney
Living Will / Do Not Resuscitate Order
There are do-it-yourself wills, trusts, and many other legal documents on the internet and in a variety of books. However, none of these documents are personalized for your situation. What's worse is that you likely will never find out if the documents are deficient because the only time they are used is when you've already passed away. Your heirs are left to deal with the issues created by the legalities you never knew were important. A general financial practitioner such as PWA will be able to help you understand what you need from an estate perspective. We'll lay out the plan and carve out as much of it as we can without entering the practice of law. This will minimize your costs such that when we take your plan to an attorney to create the legal documents, they won't have to waste time (at a much higher rate) understanding what needs to be done. All in all we will help you create and implement an effective and efficient estate plan, something that is nearly impossible to do on your own.
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