What legacy are you leaving your kids?

Everest Presents: Estate Planning 101

Your Beginners Guide to Protecting Your Legacy – And Your Family’s Future

Estate planning is a critical step for anyone who wants to secure their family’s financial stability long into the future. Unfortunately, it’s also a common step for people to overlook. 

For one thing, it’s uncomfortable, isn’t it? It’s especially easy to delay or overlook things that feel too far into the future – or too unpleasant to think about. But, for over 19 years, you’ve trusted us to guide your financial growth. That means telling you some tough truths. 

In this month’s residential article, Everest Loan Originator, Sam Fine, is going to help us answer some of the most common questions about estate planning, give you some helpful tips to get started, and debunk some common myths. We also sat down with Miriam Abraham of Haas & Zaltz, LLP – a highly respected estate planning expert – to help us break down some of the more technical aspects of estate planning.

Let’s get through this together. 

What are the benefits of estate planning?

Estate planning isn’t just for the wealthy; it’s for anyone who wants to manage how their assets are distributed in the event of your death or incapacity. 

“An estate plan is essentially one of the greatest gifts you can offer your family.” Miriam says. “You can minimize cost and maximize family harmony by making decisions ahead of time – such as how you want your wealth distributed or how you want to be cared for if you become gravely ill or disabled.”

Without having a plan in place, the State you live in decides how your assets are divided. This can often lead to delays, legal complications, and sometimes even family conflict. 

“With a well-managed estate plan, you’re able to allocate your assets to your children, grandchildren – and even charities and initiatives that matter to you,” explains Miriam. “The probate process can take a very long time and can greatly affect grieving families.” 

Alternatively, a solid estate plan also allows you to minimize court fees, financial burdens, and emotional stress for those who inherit your funds. It can also help expedite any arrangements for long-term care, lightening the burden on your family.

Our Top 4 Estate Planning Tips

Estate planning is more than just writing a will. It requires careful consideration of your finances and ongoing asset management. We’ve gathered some of the top estate planning tips from attorneys, financial planners, and tax professionals – plus our own team of veterans – to help guide you through this journey. This ties directly into our first big tip:

1. Consult The Experts

While getting started with estate planning is easier than you might think, a lot of that simplicity stems from the support and guidance of experienced professionals. By investing in the services of an estate planning expert, you’ll ensure that the distribution of your assets is legally sound while being tailored to your individual needs.

“A good example of this strategy can be seen with trusts,” Sam says. “Trusts are powerful tools for managing and protecting assets, but they’re essentially useless if they’re not properly funded. In any case, I’m a big believer in talking to the right people. It’s really important for people to work with their attorney to ensure that all designated assets are transferred to the trust – and triple-checked through deeds, titles, and account registrations.”

With the stresses of estate planning readily apparent, it’s also easy to see why getting the help of an expert can ease your anxiety. With their support, you’ll be able to move forward in your life feeling confident that the people and causes you care about the most are being tended to.

“An estate planning attorney also works to customize your estate plan for your unique situation,” explains Miriam. “They build legal caveats that initiate in the event of a divorce, marriage, birth, or death of a beneficiary – and enact legal protections that shelter your wealth from creditors and lawsuits. All in all, this is one process you should not be attempting to do by yourself.”

2. Keep Strong Financial Records

Just like any personal or professional venture that involves money or assets, disorganized records can complicate, delay, and even damage estate planning. Our experts strongly recommend that you keep clear and organized records of the following:

• Financial Statements

• Net Worth Assessments

• Investment Schedules

• Profit-and-Loss Statements

• Bank Records

• Budget/Transaction Records

By maintaining detailed, up-to-date records of your financial situation, you can help your advisors structure your estate in the most effective way possible. This leaves more money for your heirs – and less to things like taxes and fees. Be sure to review your finished plan every three to five years as well as after major life events such as marriages, divorces, births, or deaths. 

“It’s important to keep your list of beneficiaries, executors, and directives current,” Sam explains. “The last thing you want is to have issues with your estate later on, when the assets don’t end up going to the right people.”

3. Think About More Than Just Money

While leaving large sums of money to children and family members seems like the best thing to do, it doesn’t automatically guarantee financial stability. John H. Nebeker, the author of “The Family Bank”, notes that 70% of inherited wealth is depleted by the second generation – with a whopping 90% depleted by the third generation. 

Instead, many experts advise the establishment of a trust or similar account. This would help to manage financial distributions as well as offer valuable education to any heirs. 

“Structured inheritance practices, such as trusts, help families replace a sense of entitlement with a sense of opportunity,” Sam explains. “This approach encourages stewardship of the inherited funds, rather than disruptive or irresponsible spending.”

4. Don’t forget about taxes!

Depending on how your wealth is distributed, there are different State and Federal laws in place that ensure that the tax offices get their cut. In some ways, this is just the nature of the beast that is money. However, it doesn’t mean that we cannot reduce some of the impact these laws will have on our heirs. 

“Thankfully, there are some exemptions for estate taxes,” Sam explains. “Usually, a person can set aside several million dollars in assets before being subjected to estate taxes. There are also various financial products and strategies that can help.”

Here are some tools that your financial advisor can assist you with:

• Trusts – As mentioned earlier in this article, trusts are a valuable tool in estate planning. They can also reduce estate taxes and protect your assets from creditors. 

• Gifting – Gifting your assets on a regular schedule allows you to transfer wealth to your heirs in a tax-free way. Just keep in mind that, if you give more than the IRS gift tax exclusion, the remaining amount will apply to the total exemption limit for the estate. 

• Donations – Charitable contributions to qualified organizations (either directly or through a Donor Advised Fund (DAF) can provide tax benefits while allowing you to support causes you care about. 

It’s also important to address outstanding debts. Not only will this help improve your overall financial situation, it will also prevent the debts from reducing your estate’s value. 

How to Get Started With Estate Planning

We understand: Estate planning can feel overwhelming. That’s why it’s so important to partner with professionals who can guide you through the process. Here’s how it typically goes:

1. Financial Assessment – First you’ll need to know which assets you’ll be working with. Your financial advisor can help you create a net worth statement, review debts, evaluate assets, and calculate future income. 

2. Goal Setting – Next, you’ll decide how you want your assets managed and distributed. Be sure to keep this list updated along with your financial records. 

3. Structured Distribution  – Your team of financial experts will guide you through the legal, financial, and tax considerations of your estate. Then, they’ll help you select the most appropriate way to distribute your wealth according to your goals. 

Once you’re finished preparing your estate, it’s also a good idea to communicate your plans with your heirs. This is a good opportunity for you to set expectations and reduce the chance of conflict in the future. 

“Tell your trusted family members where they can find details about your wishes,” says Miriam. “It’s also a good idea to have a plan in place for how to update these people if your wishes change. For example, our firm has an electronic records system that allows our clients to share important files in a safe way. Then, after a major life event – or just over the course of a standard passage of time – your beneficiaries will be up-to-date on how you want your estate managed.”

“Ultimately, estate planning is an act of love and foresight,” Sam says. “By addressing common mistakes, staying organized, and getting expert help – you can truly create a lasting legacy that benefits your family for generations.”

Everest would like to extend a special thank you to our guest expert, Miriam Abraham, for her invaluable contributions to this article. It is with the collaboration of trusted organizations like Haas and Zaltz that we can continue to provide well-rounded support to all of our clients. 

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