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What Type of Financial Planning Should High Net Worth Individuals Utilize?

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What Type of Financial Planning Should High Net Worth Individuals Utilize

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High net worth financial planning is not a one-size-fits-all strategy. With significant wealth comes the need for tailored financial planning that addresses complex challenges and opportunities. In this article, we’ll explore ten essential strategies that high net worth individuals (HNWIs) should consider to protect, grow, and transfer their wealth effectively.

1. Comprehensive Wealth Management

Wealth management for high net worth individuals goes beyond basic financial planning. It involves a holistic approach that integrates investment management, tax planning, estate planning, and risk management. A dedicated wealth manager can help align your financial goals with your broader life objectives. By consolidating all financial aspects under one strategy, you ensure that each element works harmoniously together. This comprehensive approach is vital for preserving and growing your wealth over the long term.

2. Strategic Tax Planning

Effective tax planning is crucial in high net worth financial planning. With significant assets, even a slight change in tax law can have a substantial impact on your wealth. Strategies such as tax-loss harvesting, charitable giving, and trusts can help minimize your tax burden. Collaborating with a tax advisor who understands the nuances of HNWI tax strategies ensures you’re maximizing every available deduction and credit. Proactive tax planning can save you millions over time, making it an essential part of your financial plan.

3. Estate Planning and Wealth Transfer

Estate planning is critical for high net worth individuals to ensure a smooth transfer of wealth to future generations. Without a solid estate plan, your heirs may face significant tax liabilities and legal challenges. Trusts, wills, and gifting strategies can help protect your assets and reduce estate taxes. Planning early also allows you to incorporate philanthropic goals, ensuring your legacy aligns with your values. A well-structured estate plan provides peace of mind and secures your family’s financial future.

4. Asset Protection Strategies

Asset Protection Strategies

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High net worth individuals are often targets for lawsuits and other financial risks. Asset protection strategies, such as establishing trusts or limited liability companies (LLCs), can shield your wealth from creditors and legal claims. It’s essential to work with an attorney who specializes in asset protection to ensure your strategy is robust and legally sound. Proper asset protection not only safeguards your wealth but also provides financial security for your family. Implementing these measures proactively can prevent potential losses in the future.

5. Diversified Investment Portfolios

A diversified investment portfolio is essential for mitigating risk and maximizing returns. High net worth financial planning should include a mix of asset classes, such as stocks, bonds, real estate, and alternative investments like private equity or hedge funds. Diversification helps spread risk and reduces the impact of market volatility on your overall wealth. Regular portfolio reviews and rebalancing ensure your investments stay aligned with your goals. A well-diversified portfolio provides stability and growth, safeguarding your wealth against market fluctuations.

6. Philanthropic Giving and Charitable Trusts

Philanthropy plays a significant role in high net worth financial planning. Charitable trusts, donor-advised funds, and private foundations offer tax benefits while supporting causes you care about. Strategic philanthropy can also enhance your legacy and involve your family in giving back. It’s important to align your philanthropic goals with your overall financial plan to maximize impact. Thoughtful charitable giving not only benefits society but also reinforces your personal values and long-term vision.

7. Retirement Income Planning

Even for high net worth individuals, retirement planning requires careful consideration. A well-designed retirement plan ensures you maintain your lifestyle without outliving your wealth. Consider factors like healthcare costs, inflation, and potential market downturns when planning for retirement. Diversifying income streams through investments, real estate, and annuities can provide financial security in your later years. Proper retirement planning allows you to enjoy your wealth while preserving it for future generations.

8. Succession Planning for Family Businesses

Succession Planning for Family Businesses

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For high net worth individuals with family businesses, succession planning is vital. Without a clear plan, business continuity and family harmony can be jeopardized. Establishing a succession plan involves identifying and preparing the next generation of leadership, as well as addressing potential conflicts. It’s also important to consider tax implications and legal structures to ensure a smooth transition. Succession planning not only protects your business but also preserves your family’s legacy.

9. International Financial Planning

If you have assets or interests abroad, international financial planning is a must. Navigating different tax laws, regulations, and currencies can be complex. High net worth financial planning should include strategies for managing foreign investments, estate planning, and tax obligations. Working with advisors who have expertise in international finance ensures compliance and optimizes your global wealth strategy. International planning is essential for protecting and growing your wealth on a global scale.

10. Regular Financial Reviews and Adjustments

High net worth financial planning is not a set-it-and-forget-it process. Regular financial reviews allow you to assess your progress and make necessary adjustments. Life changes, economic shifts, and evolving goals require ongoing attention to your financial plan. Working with a team of advisors ensures you stay on track and adapt to any changes in your financial situation. Consistent reviews and updates keep your financial picture accurate and aligned with your objectives.

Tailored Financial Planning for High Net Worth Success

High net worth financial planning is complex and multifaceted, requiring a personalized approach. By incorporating these ten strategies, you can protect, grow, and transfer your wealth effectively. Remember, successful financial planning is about more than just managing money—it’s about creating a lasting legacy and achieving your life goals. Work closely with experienced advisors to ensure your financial plan is tailored to your unique needs and aspirations.

12 Reasons Millennials Are Pushing Off Estate Planning

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millennial estate planning

Estate planning is often considered a task for older adults, those who are well-established in their careers, have accumulated assets, and have families to consider. However, millennials, are notorious for putting off estate planning despite its importance. A 2024 study by Trust & Will found that an overwhelming 62% of millennials do not have a Will or Trust. Furthermore, more than half do not know what would happen to their assets if they died without an estate plan. Here are twelve reasons why millennials might be delaying this critical task

1. Feeling Invincible

will

Many millennials perceive estate planning as something for older generations, leading them to believe they have plenty of time to address it later. Millennials are often referred to as the ‘sandwich generation’, meaning that they are often left caring for both their young children and their aging parents. With a greater emphasis on their parent’s care, many millennials are neglecting to protect their own assets.

2. Prioritizing Immediate Needs

millennial finances

Millennials often focus on paying off student loans, saving for a home, or starting a family, relegating estate planning to the back burner. Due to high inflation, much of millennial’s focus is on making ends meet today, with little forward-thinking.

3. Financial Insecurity

financial insecurity

With the burden of student loan debt, stagnant wages, and rising living costs, many millennials feel financially unstable, making them hesitant to invest in estate planning. Many millennials question whether they have enough saved to actually warrant undergoing the estate planning process.

4. Digital Assets Complexity

digital assets

Unlike previous generations, millennials have significant digital footprints, including social media accounts, cryptocurrency, and online banking, which can complicate estate planning.

5. Lack of Knowledge

lack of knowledge

Estate planning can be complex, and young adults may not fully understand its importance or know where to start. Reaching out to a lawyer is a first good step to start the estate planning process.

6. Changing Family Dynamics

bride running from marriage

Millennials are more likely to delay marriage and starting families, leading to uncertainty about who should be included in their estate plans.

7. Distrust in Institutions

distrust in institutions

Some millennials have a general distrust of financial institutions and may be skeptical about the integrity of financial advisors.

8. Fear of Mortality

fear of mortality

Confronting mortality is uncomfortable for many people, and millennials are no exception. Avoiding estate planning may be a way to sidestep thoughts of mortality and aging.

9. Preference for Experiences Over Assets

experiences over assets

Millennials often prioritize experiences over material possessions, leading them to underestimate the importance of protecting their accumulated assets.

10. Delaying Due to Perceived Complexity

complexity

The legal jargon and complexities involved in estate planning can be overwhelming, leading millennials to procrastinate on taking action.

11. Optimism Bias

optimism

Many millennials have a positive outlook on the future and may believe that they will have more time and resources to address this necessary task later in life.

12. Misconceptions About Cost

high costs

Millennials may overestimate the cost of estate planning, assuming it is an expense they cannot afford at their current stage in life. Most estate planning costs range from $1,000-$5,000 but can vary based on the estate’s complexity.

Tackling Estate Planning

millennial estate planning

Despite these reasons for procrastination, estate planning is crucial for individuals of all ages, including millennials. It ensures that their assets are distributed according to their wishes, minimizes tax liabilities, and provides protection for themselves and their loved ones in the event of incapacity or death.

Why You Shouldn’t Delay Estate Planning

Millennials who have been delaying estate planning should consider seeking guidance from financial advisors or estate planning professionals to navigate the process and gain peace of mind knowing their affairs are in order. By addressing estate planning early, millennials can safeguard their legacy and ensure their loved ones are taken care of according to their wishes.

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Blended Family Will: 12 Ways To Split an Inheritance In A Blended Family

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blended family willBlended families combine members from previous and current relationships, often leading to complex dynamics and unique challenges in estate planning. To avoid potential disputes and ensure that all family members are treated fairly, it’s crucial to approach a blended family will with thoughtful strategies tailored to the specific needs of your family structure. Below are twelve practical ways to structure a will and manage inheritance in a blended family context.

1. Open Communication

Begin with open conversations about inheritance planning with all family members involved. Discussing everyone’s expectations and concerns can help prevent misunderstandings and conflicts after your passing. This transparency helps to manage expectations and build trust among family members.

2. Fair, Not Always Equal

In blended families, fair does not necessarily mean equal. Consider the needs and circumstances of each family member. For example, younger children may need financial support for education, while adult children might benefit more from immediate financial assistance or property.

3. Use of Trusts

Setting up trusts can be an effective way to manage how and when your assets will be distributed. Trusts can provide for minor children, manage assets given to young adult children, and protect the inheritance from external influences like creditors or divorces.

4. Specific Bequests

Clearly specify certain items or amounts of money to go to specific individuals in a blended family will. This can help in balancing out perceived inequalities. For instance, heirlooms, jewelry, or even specific sums of money can be designated to certain children or family members.

5. Life Insurance Policies

Consider purchasing life insurance policies that designate different beneficiaries, which can ensure that both your biological children and stepchildren are provided for.

6. Staggered Distributions

Instead of distributing all assets at once, consider staggered distributions at different stages of beneficiaries’ lives. This can help in providing support when it’s most needed, such as college funding or down payments on a first home.

7. Consider Spousal Access

Ensure your spouse has sufficient resources to live comfortably if they survive you but also consider the ultimate distribution of remaining assets once your spouse passes away. This might involve trusts or specific directives in your blended family will.

8. Guardianship Clauses

If you have minor children, it’s crucial to specify guardianship clearly in your will. Discuss these decisions with potential guardians to ensure they are willing and able to take on the responsibility.

9. Include All Children

Make sure to mention all children—biological, adopted, and stepchildren—in the blended family will, even if the inheritance amounts differ. Omitting a child can lead to disputes and feelings of resentment.

10. Update Regularly

As relationships and financial situations evolve, so should your will. Regular updates every few years or after significant life changes (like remarriage or the birth of another child) can keep your estate plan current and relevant.

11. Seek Professional Help

Given the complexities involved, consulting with an estate planning attorney who has experience with blended families can provide valuable guidance and ensure that all legal aspects are properly addressed.

12. Personal Letters

Consider including personal letters to explain your decisions regarding the distribution of your assets. These letters can provide context and comfort to family members, helping them understand your choices and reducing potential conflicts.

Planning for Peace of Mind

Estate planning in a blended family requires careful consideration and sensitivity to the individual needs of all members involved. By implementing these twelve strategies, you can create a comprehensive plan for your blended family will that ensures your assets are distributed fairly, supports your family’s long-term well-being, and maintains harmony among loved ones.

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10 Genius Wealth Transfer Hacks That’ll Make Your Heirs Thank You Forever

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family wealth transfer

Wealth transfer isn’t just about passing on assets; it’s about leaving a legacy that benefits your heirs for generations to come. While estate planning can seem daunting, there are several savvy strategies that can maximize the value of your estate and ensure your heirs are well taken care of. These hacks go beyond traditional methods and can make a significant difference in how your wealth is preserved and distributed. Here are ten genius wealth transfer hacks that will make your heirs thank you forever.

1. Start Early

wealth transfer starting early

One of the most effective wealth transfer hacks is to start planning early. The earlier you begin, the more options you have for optimizing your estate plan, minimizing taxes, and maximizing the growth of your assets over time.

2. Establish a Trust

family

Trusts are powerful tools for wealth transfer because they allow you to specify how and when your assets will be distributed to your heirs. By establishing a trust, you can protect your assets from probate, minimize estate taxes, and ensure that your wishes are carried out exactly as you intended.

3. Leverage Life Insurance

wealth transfer life insurance

Life insurance can be a valuable tool for wealth transfer, providing a tax-free payout to your beneficiaries upon your death. By purchasing a life insurance policy, you can ensure that your heirs receive a financial cushion to help cover expenses or pay off debts without depleting your estate.

4. Gift Assets Strategically

gifting assets

Rather than waiting until you pass away to transfer assets to your heirs, consider gifting assets strategically during your lifetime. By taking advantage of the annual gift tax exclusion and lifetime gift tax exemption, you can transfer wealth tax-efficiently while reducing the size of your taxable estate.

5. Utilize Family Limited Partnerships

wealth transfer planning

Family limited partnerships (FLPs) allow you to transfer assets to your heirs while retaining control over those assets during your lifetime. By gifting limited partnership interests to family members, you can transfer wealth at a discounted value for estate tax purposes, ultimately reducing the tax burden on your estate.

6. Implement a Grantor Retained Annuity Trust (GRAT)

grandparent and grandchild

A GRAT is an irrevocable trust that allows you to transfer assets to your heirs with minimal gift tax consequences. By transferring assets into a GRAT and retaining the right to receive annuity payments for a specified period, you can transfer wealth to your heirs tax-efficiently while potentially avoiding gift and estate taxes altogether.

7. Make Charitable Contributions

charitable donations

Charitable giving can be an effective wealth transfer strategy, allowing you to support causes you care about while reducing the size of your taxable estate. By making charitable contributions during your lifetime or through your estate plan, you can leave a lasting impact on your community while minimizing estate taxes.

8. Maximize Retirement Accounts

retirement accounts

Retirement accounts such as IRAs and 401(k)s can be valuable assets for wealth transfer, but they come with complex tax implications. By carefully planning how and when you withdraw funds from these accounts and designating beneficiaries strategically, you can minimize taxes and maximize the value of these assets for your heirs.

9. Consider Generation-Skipping Trusts

family generations

Generation-skipping trusts (GSTs) allow you to transfer assets to beneficiaries who are two or more generations below you, such as your grandchildren, without incurring generation-skipping transfer taxes. By leveraging GSTs, you can preserve wealth for future generations while minimizing tax consequences. However, GSTs are most effective for higher net-worth families.

10. Educate Your Heirs

heirs

Finally, one of the most valuable wealth transfer hacks is to educate your heirs about financial literacy and responsible wealth management. By providing them with the knowledge and skills they need to manage their inheritance wisely, you can ensure that your wealth has a lasting and positive impact on their lives.

Transferring Wealth Strategically

wealth transfer

Wealth transfer is a complex process that requires careful planning and consideration. By implementing these ten genius wealth transfer hacks, you can optimize your estate plan, minimize taxes, and ensure that your heirs are well-positioned to thrive for generations to come. Whether you’re just beginning to plan your estate or looking to fine-tune your existing plan, these hacks offer valuable strategies for maximizing the value of your wealth and leaving a lasting legacy for your heirs.

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Financial Planning Basics: The Financial Pyramid

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The first time I heard about the financial pyramid, I was instantly intrigued. I had never thought about it in this concept before, but I unintentionally had been practicing this in my own life.

In finances you have to build the base before you can reach the top or it will all fall apart, hence the allegory of a pyramid.

financial-pyramid

The Base

The base of your financial pyramid should be a solid financial plan. This includes your written budget, short-term and long term goals, and how you will make your income as well as an investment plan to be implemented in the future.

You should have a positive cash flow, meaning, no longer using debt to fund your lifestyle.

RELATED: The Importance of a Personal Investing Statement

Once you have implemented the base, you can move onto the first building block: protection.

Protection

You must protect yourself from the unimaginable, so I recommend everyone have a will and power of attorney, insurances such as life, health, auto, homeowner’s/renter’s, and disability, and a basic emergency fund of at least $1,000-$2,500.

I was thankful to have my mini-emergency fund when I had some car issues because I was able to pay cash to repair them instead of having to go into debt. The overall pyramid looks something like this:
the-financial-planning-pyramid

The second building block is low-risk wealth accumulation. This would include saving for a home, retirement, and children’s college education, in addition to reducing consumer debt.

Debt Reduction

Financial guru Dave Ramsey teaches that you should get completely rid of any debt before beginning savings, although, in my opinion, you should still invest in retirement while reducing debt only if your employer offers a match.

I, myself, am in the debt reduction stage but still contribute to my retirement account since my employer offers up to a 4% match into my 401(k).

Additionally in this step, you should create your emergency savings fund. Many people believe an emergency fund of 3-6 months’ worth of expenses is adequate.

Investing

The third building block is high-risk wealth accumulation.  This includes investing. Expanding on the second block, in this stage, you will max out your retirement accounts and then build a non-registered investment portfolio.

Once you have built your net worth to an amount sufficient to fund your lifestyle and retirement, you can move to the next stage of investing– speculation (also known as speculative investing.) In this stage, you invest money into investments such as start-up companies.

This is very risky, so you don’t want any debt by this stage. Also, you should only invest a small portion of your total investments into speculation. Also in this stage, you’ll want to begin tax planning, especially as your retirement investments increase.

Estate and Charity

The final building block is wealth distribution. You’ll gift and spend the money you have earned. As well as plan your estate for future generations or charity upon your death. Since your net worth increased quite a bit since you first started the financial planning pyramid, you should update your will and/or trust.

Finally, once you’ve got these basics nailed down, it’s time to hire some help. One approach a lot of millennials use is robo-advisors. A robo-advisor is a machine that uses various theories about portfolio allocation to make investing decisions. If you’re interested in a critical review of this, consider checking out Roboadvisorpros.com, they have a good article on the topic.

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Why You Should Hire a Financial Advisor and an Estate Planner in 2023

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Financial planning sounds like a thing for the rich. However, working with a financial advisor is the best decision if you wish to achieve your financial goals. Estate planning is equally important because you can decide who will receive your wealth once you pass on. Even if you have financial knowledge, there are numerous benefits to hiring a financial advisor. Let’s examine the top six.

1. To Get Help With Financial Planning

With so much information online, you can manage your finances independently. However, financial advisors and estate planners add expert knowledge. They help you set realistic savings, retirement, or your child’s education goals. The experts help you create a plan to achieve the goals and prepare for emergencies such as health costs.

2. To Make Better Investment Decisions

The market is awash with numerous investment options, and choosing the most viable can be daunting. The good news is that a financial advisor can weigh the options, help you understand the risks, and recommend suitable investments. The finance professionals consider your financial goals and risk appetite and choose an investment option that suits your dreams.

3. To Prepare Adequately for the Unexpected

While many people think only the wealthiest need financial and estate planning, it is beneficial to have a plan in case the unexpected happens. About 77% of American adults believe estate planning is for everyone, regardless of wealth. That’s good news, and you should be part of this percentage. An estate planner makes sound investment decisions in your best interest in case you become incapacitated or pass away. They ensure the investments go to family members or the rightful heirs.

4. To Follow Financial Laws and Regulations

Laws and regulations keep changing constantly. You risk jail or fines if you unknowingly fail to abide by new rules. A financial advisor will help you understand how these changes will affect you. They help reduce tax liability and ensure your estates are distributed according to set laws when you are gone.

5. To Help You Stick to Your Goals

We all have an emotional attachment to our finances and can be tempted not to stick to our goals. It takes work to stick to the plan. Financial advisors are a voice of reason and will always motivate and remind you to stick to the program. Remember, financial goals can change with time. If you have financial goals that you wish to meet, then working with a financial advisor is worth it. In fact, according to a study done by MagnifyMoney, 95% of people who work with financial advisors believe it is worth the money.

6. To Prepare Essential Real Estate Documents

Detailed estate planning typically involves three documents. These documents are the power of attorney, a healthcare directive, and a living trust or last will. A real estate advisor will guide you in preparing relevant documents on how you wish your assets, debts, and medical needs to be managed. During estate planning, you will need to follow three main steps.

  • Prepare Essential Documents – Documenting all your assets and debts helps you determine how much you will leave your loved ones.
  • Transfer Your Assets – A will communicates how you will distribute your assets when you die. If your children are minors, you must appoint a preferred guardian.
  • Set up a Power of Attorney and Health Care Directive – Creating a power of attorney is crucial. You must choose a trustworthy attorney because they will handle your property’s decisions while you are alive, ill, or incapacitated.

Most people think financial and real estate planning is for the wealthy. The truth is, planning your finances will help you achieve your financial goals faster. Estate planning, on the other hand, will give you peace of mind knowing that you have documented your financial affairs.

When Should You Meet With a Professional to Obtain a Will?

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It’s important to write a will, and even more important to make sure that it’s professionally done. There are many kits and templates that you can use to help you draft a will by yourself on the internet, but it’s best to meet with a professional. The following are some of the instances in which you should consider meeting up with a professional to obtain a will.

When You Need to Make Sure It’s Legally Binding

It’s no secret that the legal field is laced with a lot of jargon that the regular person may find hard to understand. This means that there’s always the risk of misrepresenting your interests when you choose to write your will yourself. It’s important to write a will and estate plan or set up a trust, which is something that about 32% of adults in the U.S. have already done.

It’s equally important to ensure that all your interests are clearly expressed and that the clauses you need to be met are legally binding. This will help you avoid the possibility of leaving your loved ones, whom you are trying to protect by writing a will in the first place, ending up in legal tussles over something that was not clarified in your will.

If You Need Help with Complex Family Dynamics

If you have complicated family dynamics and you want to make sure that your will is drafted correctly, you should get help from a professional. An attorney will probably know the steps to take as well as the clauses to include to make sure that your will reads as you want it to. They will help you finalize the details of your will so that you have peace of mind in the fact that you have done your best for your family.

No one needs to be left out or otherwise placed at a disadvantage while they should be covered fairly by your will. Of all the Americans aged over 65 years old, 50% of them have their wills up to date. This is something that may take the help of a professional to do right, making it worth the money spent on enlisting their services.

When You Want to Protect Your Interests

When drafting a last will and testament, you not only seek to protect your loved ones but yourself as well. This is true for events such as in case you get into an accident or suffer from a condition that leaves you incapacitated. Since you want to secure the best possible care for yourself, it’s important to outline these details in your will.

A professional can help you put your needs across more accurately and get the best outcome. They will point out some issues that they’ve come across in their experience and enable you to get a document that will satisfactorily cover your needs. This way, you can be sure that your future health is going to be in good hands and that you will get the care that you want. Up to 10% of people without a trust or will have actually sought advice from a professional advisor, including attorneys. Clearly, many people know the benefits of involving professionals in this sensitive matter.

If you are in any of the situations outlined above, you may benefit from meeting with a professional to get a will drafted for you. It’s going to be the best decision that you make for your finances now and in the future as well as for the continued safety of the ones you love.

The Financial Responsibilities of Sharing Your Life With Someone

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Living as a couple changes one’s life in many ways. It is not all about you, but about ‘we.’ Money issues play a big role in many couples’ arguments. Misunderstandings occur due to a lack of communication, power struggles, or clashing ideas. Planning for financial responsibilities is vital from the start to enjoy a smooth life as a couple. Couples should understand each other’s financial needs and support each other.

 

Decide on Estate Planning

Estate planning is essential for retaining and protecting control of your property during your lifetime and determining how to transfer your assets after death. Without estate planning, your beneficiaries may face problems during inheritance. The process of estate planning is easy. First, gather basic information on real estate holdings or any other asset.

Estate planning is confusing; that’s why 74% of Americans postpone it. Next, establish your goals and choose your beneficiary. It can be your spouse, children, or anyone else who matters to you. That said, make sure you update your will, power of attorney, and beneficiaries.

Budgeting for Basics

It is common for one partner to handle the bills and investments and the other to cater to other basic needs. The best way to share financial responsibilities depends on the partner’s income. Couples should be open about finances and adopt a joint approach. This way, both partners will be responsible and avoid overspending. Financial literacy is vital for both partners, from making decisions about the future to handling emergencies. A financial planner can help you plan for your financial responsibilities.

Home Renovation

Couples commonly take the time to decide where to live together. One spouse can move into the other’s house or purchase a new home. Although, a couple can opt to renovate the house if it’s old or outdated. Most U.S. homes require renovation because 80% of them are at least 20 years old. House renovation depends on one’s budget and needs, and the first step is to make a budget for all the expenses. You can also decide on home improvement financing if your monthly income is sufficient. How long will the renovation take? How big is the project? A couple should consider all these factors before embarking on the project.

Investing

It is best to have investments as a couple. Learn about basic investment concepts and decide what’s right for your family. Seek advice from experts and talk with your partner about what investment plan will help meet your goals. You can invest jointly or separately. It will all depend on your financial flexibility and comfort.

Filing Taxes

A couple can file their tax returns together or separately. A joint filing is cost-effective, although the couple’s circumstances could be starkly different. Differences could arise if one owns a business and another works for an employer that sends a standard W2 form. Partners can file separately if they don’t want to be part of another person’s business or if they prefer their independence in that realm. If a partner has a loan, deciding on filing separately or jointly may affect the loan repayments and could lead to the partner taking on some of the debt.

Wedding Expenses

Before you say ‘I do,’ couples should disclose their financial status to one another. Let your partner know your debts, assets, liabilities, and responsibilities for extended or immediate family members. Once you know your partner’s assets and finances, sign a prenuptial agreement to protect premarital assets and children from previous marriages. Although one couple’s debt doesn’t become the other’s responsibility after marriage, that debt can still affect your joint finances.

Who pays for the wedding expenses? A couple should plan how much and who will finance the wedding. An average couple spends $22,500 on a wedding or a ceremony. If you are a young couple with little savings, establishing a wedding budget and sticking to it is advised. You can scale back your expectations since the cost can double what you expected.

 

Most people think of companionship and love when entering a marriage. But it takes more than emotional commitment. Marriage comes with legal and financial commitments. Once you tie the knot, the process will have financial implications. Therefore, couples should be on the same page on finance matters and how to handle them.

How to Transfer Assets to Children Before Death

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If you are a parent, you already know it’s important to plan for your children in case something happens to you. One way to do this is by transferring assets to them before you die and in your estate planning. This can be done in a number of ways, and each has its benefits. In this blog post, we will discuss the different options available to you and how each can help protect your children’s future.

Remember: Generational Wealth building isn’t just for parents: grandparents, aunties, and uncles can change the shape of the entire next generation.

Work with A Family Law Attorney and a Tax Planner

family law attorney

There are many different ways to transfer assets to your children, and almost all of them require a lawyer and have tax implications. It is important to consult with an attorney as well as a tax planner, both to choose the transfer structure that is right for you and also to ensure that the documents are compliant with Federal and State property and tax law.

Draw Up a Will

One way to transfer assets to your children before death is through a will. A will is a legal document that outlines how you would like your assets to be distributed after you die. A will doesn’t actually transfer ownership of your assets until after you die, but it can be used to specify exactly who should receive what.

If you have a will, it is important to keep it up-to-date as your life and circumstances change. You should also review it regularly with a family law attorney to make sure it still meets your needs.

One important note: a will is great for establishing your wishes for the distribution of your assets are followed, but it will not keep your estate out of probate. Probate is the legal process of distributing a person’s assets after they die, via the courts in your state. It can be time-consuming and expensive, if you have substantial or complex assets, so many people choose a trust.

Create and Move Assets Into A Trust

will and trust documents

A trust is an arrangement in which one person (the trustee) holds and manages property for another person (the beneficiary). It’s a critical part of estate planning. Transferring assets into a trust can help avoid probate because the trustee can distribute the assets according to your wishes without having to go through the court system.

Moving assets into a trust that can be managed by a trustee will give your children access to the assets when they reach a certain age while ensuring that the assets are managed responsibly.

One common type of trust is a living trust, which is created during your lifetime. You can name yourself the trustee, which gives you control over the assets during your lifetime. Then, when you die, the trust remains in force and the beneficiary can receive the assets without having to go through probate. You can even trigger the execution of your trust before you pass away.

This is a good option if you want to maintain control over the assets during your lifetime, but also want to avoid probate.

Name Beneficiaries on Financial Accounts and Insurance Policies

name beneficiaries

Most financial accounts and life insurance policies allow you to name a beneficiary. This means that the account or policy will be transferred to the named beneficiary upon your death, without having to go through probate. Having updated beneficiaries is the cheapest and easiest way to transfer assets such as retirement accounts, bank accounts, and life insurance policies.

It is important to review your beneficiaries regularly and update them as needed, especially after major life events such as marriage, divorce, birth, or death. This can be especially important for single parents and blended families.

Transfer Assets During Your Lifetime

Another way to transfer assets to your children before death is through a gift or by selling the asset to them for less than its fair market value.

The upside of this option is that you are still around to help them manage the asset. The downside is that lifetime transfers have serious tax implications that vary depending on the value of the asset and your state’s laws.

Gift Assets to Your Children

You can give $16,000 per year, per child (or any other recipient) without needing to file any tax forms or pay any tax. If you are married, you and your spouse can each give $16,000, for a total of $30,000 per child. More importantly, the current (2022) Federal gift tax lifetime limit is $12.06 million per person, and you can also double it if married. While it would require you to file a form, gifts of any size can be given to your children without owing any gift tax, as long as the total amount gifted during your lifetime does not exceed the $12.06 million limit.

Sell Assets to Your Children for Less Than Their Fair Market Value

sell assets to children

You can also sell assets to your children for less than their fair market value. This is The most advanced move, absolutely requires a competent lawyer and tax planner, and is generally most appropriate for family businesses. Generally, this involves a contract in which you sell the asset to your children for an agreed-upon price that is less than the fair market value.

There are a few different ways to transfer assets to your children before death. The most common ways are through a trust, naming beneficiaries on financial accounts and insurance policies, or transferring the assets during your lifetime.

Each method has its benefits and drawbacks, so it is important to discuss your options with a family law attorney and tax professional to choose the option that best suits your family.

End-Of-Life Care Costs

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End-of-life care is a treatment someone nearing death receives in the final days, weeks, months, or sometimes years of his or her life. During this time, medical care and support continue regardless of whether the patient’s condition is curable or not. Many receive professional medical care in hospitals, nursing homes, or even in their own home. Patients are then placed in either palliative care or hospice care, and the costs are paid by Medicare, Medicaid, private insurance, charities, the individual, or other payment programs. Here are some things to know about end-of-life care costs.

Eligibility for Medicare’s Hospice Benefit

  • The patient must be 65 years or older
  • Diagnosed with a serious illness
  • Certification from a doctor that he or she has six months or less to live
  • Agrees to forgo life-saving or potentially curative treatment
  • Hospice provider must be Medicare-approved

Medicare provides care for two 90-day periods in hospice, followed by an unlimited number of 60-day periods. At the start of each period of care, a doctor must re-certify that the patient has six months or less to live.

Medicare’s hospice coverage includes a broad range of services:

  • Nursing care
  • Medical social worker services
  • Physician services
  • Counseling (including dietary, pastoral, and other types)
  • Inpatient care
  • Hospice aide and homemaker services
  • Medical appliances and supplies (including drugs and biologicals)
  • Physical and occupational therapies
  • Speech-language pathology services
  • Bereavement services for families

Hospice costs not covered by Medicare

  • Room and board
  • Emergency care such as ambulance fees or emergency room costs
  • Treatment or prescription drugs attempting to cure illness

Hospice costs are paid for in the following manner: Medicare – 85.4%; Medicaid – 5%; managed care or private insurance – 6.9%; other (including charity and self-pay) – 2.7%.

Respite care is a short-term break for caregivers of terminally ill patients. The patient can stay for up to five days in a Medicare-approved nursing home, hospital, or hospice facility.

Some Costs

Studies showed 42% of people died at their home at $4,760 in their last month of life. Whereas in a hospital it cost $32,379. Dying in a nursing home was the second most expensive, hospice care was third, and the emergency room.

Now that all of this has been explained, there are some things you need to do or things you should do to prepare for these costs.

Planning

You have to save for it. A lot of retirement planning is determined by how much you are going to spend in retirement. But where would you spend? You would need funds to cover your medical bills, hire caregivers  — look up “caregiver agencies near me” on the Web to find one — and afford gas and food.

However, not everyone has to be concerned about it. If you have all of your debts paid off and your retirement account is in a place where you don’t have to be worried about running out of money, then you probably don’t have to think about it too much. That doesn’t negate the fact that you should plan, your planning just looks a little different. Instead of buying final expense life insurance, maybe you’re buying a plot in a cemetery.

If you have all of your debts paid off and your retirement account is in a place where you don’t have to be worried about running out of money, then you probably don’t have to think about it too much. However, that doesn’t negate the fact that you should plan; it will just mean that your planning may look a little different from that of others. For example, it may be the perfect time to think about looking into final expense policies.

Final expense insurance is a life insurance product that’s purchased to pay for burial and/or funeral expenses. It’s also called burial insurance and senior insurance. In most cases, the benefit from the insurance product reimburses the costs incurred from burial and funeral, as this can take longer for those to get paid out. This could provide significant help to you and your family when that time comes and is something that you may want to consider if you want to start thinking about these scenarios now.

Planning will look different for everyone, but your circumstances don’t excuse you from planning. So, start thinking about it today.

Final expense insurance is a life insurance product that’s purchased to pay for burial and/or funeral expenses. It’s also called burial insurance and senior insurance. In most cases, the benefit from the insurance product reimburses the costs incurred from burial and funeral, as it takes longer for those to get paid out.

End-of-life care is a necessity for most people. It’s important to plan for it.

Related reading:

How Medicaid covers hospice care

The Cost of Medicare Plan G in 2022

10 Financial Hacks for a Funeral

Disclaimer:

**Securities offered through Securities America, Inc., Member FINRA/SIPC. Advisory services offered through Securities America Advisors, Inc. Securities America and its representatives do not provide tax or legal advice; therefore, it is important to coordinate with your tax or legal advisor regarding your specific situation. Please see the website for full disclosures: www.crgfinancialservices.com