Studies estimate that heirs lose 70 percent of family wealth by the end of the second generation. Also, they lose 90 percent by the end of the third generation. Therefore, to help your loved ones avoid this troubling statistic, educate, and update your extended family about wealth transfer goals. Finally, it alerts them to the plan you created to achieve these goals.
Communicate to Future Generations
Consider communicating the following information to your family before a wealth transfer. Thus, you will ensure that your loved ones will understand and prepare to carry out your wishes during a difficult time:
- A net worth statement or, at a minimum, a broad overview of your wealth
- Your final wishes for burial or cremation and memorial services
- Estate planning documents
- Durable Financial Power of Attorney (POA)
Designates who will manage your accounts and property if live but cannot make decisions. What’s more, states your chosen authority and decision-maker. Also, avoids a legal conservatorship (which is the court supervision of your financial affairs). - Medical POA
Names who will make medical decisions for you if you cannot make them for yourself. Also, avoids guardianship (which is often an adversarial court proceeding). - Advance Directive or Living Will
Clarifies your wishes regarding life-sustaining procedures - Health Insurance Portability and Accountability Act (HIPAA) Authorization Form
Names the person you choose to access protected healthcare information - Revocable Living Trust (RLT)
Avoids guardianship or conservatorship of your property during your lifetime. Also avoids probate at death. Keeps your final financial wishes private. Minimizes delays, costs, and bureaucracy. - Pour-Over Will or Last Will and Testament
A catch-all for money and property. This covers assets not transferred into your RLT or by beneficiary designation before death. Or, it assesses the primary means to transfer money and property in your sole name without an RLT. - Irrevocable Life Insurance Trust (ILIT)
Removes life insurance from your taxable estate. Further, provides immediate access to cash for loved ones’ needs, administration costs, and taxes. - Other Advanced Estate Planning Tools
Protect money and property from creditors, predators, outside influences, and ex-spouses. Also enables charitable giving; minimize taxes; and creates dynasty trusts.
Who will make wealth transfer decisions if you die or are incapacitated?
This includes the agents you name in your durable financial POA and medical POA, the successor trustee of your RLT and any other trusts you have created. Also, it names the personal representative from your last will and testament or pour-over will. Therefore, the benefits of properly drafted lifetime discretionary trusts you create for your extended family:
- Minimizes estate taxes at each generation
- Fosters educational opportunities
- Provides asset, divorce, and remarriage protection
- Protects special needs beneficiaries
- Allows for professional account and property management
- Minimizes estate taxes at each generation
- Creates a legacy for future generations
Your Goals and Intentions for Wealth Transfer
Signifies how the beneficiary will use the money. (For example, education, charity, business opportunities, or retirement instead of vacations and sports cars). Also names who will serve as the trustee of any lifetime discretionary trusts created for your family members. Finally, it explains selections.
Location of Important Wealth Transfer Documents
This includes how to access digital assets such as social media, online bank accounts, and crypto currency.
Key Advisors and Contact Information
Next, names the estate planning attorney, financial advisor, certified public accountant, insurance agent, spiritual advisor, etc.
About Skvarna Law in Glendora & Upland, California
Skvarna Law Firm operates offices in Glendora and Upland, California. Also, we provide legal services. We cover San Bernardino, Los Angeles, Orange, and Riverside Counties. This includes several cities. Upland, Ontario, Rancho Cucamonga, Fontana, Colton, Rialto, Chino, Chino Hills, Glendora, Claremont, Pomona, La Verne, Montclair, San Dimas, Azusa, Covina, West Covina, Diamond Bar, Walnut, La Puente, Corona, Norco & Mira Loma.
