Estate Plan or Wealth Transfer Plan?

Nearly 55% of American adults die without a will or estate planning documents. This lack of planning can cause years of stress and heartache for your surviving family members and heirs. If you die without an estate plan in place, your family may be subject to:

  • Attorney expenses and court costs,
  • Wasted time and frustration, and
  • The inability to receive the inheritance you wanted them to receive.

Proper documents can ensure that your wishes are fulfilled in a manner that is as speedy, inexpensive and stress-free as possible for everyone involved

What is Wealth Transfer?

While estate planning documents are important for avoiding probate and maintaining family harmony, a wealth transfer plan can add another level of security to your legacy. With over 70% of family wealth lost by the second-generation and over 90% by the third, it is imperative to lay the groundwork now for proper wealth transfer.

Why Wealth Transfer?

A wealth transfer plan achieves a number of goals, including: preparing your heirs for their inheritance, maintaining family harmony, and ensuring that your wishes are fulfilled.

Few families are able to maintain wealth across generations. This is due to a phenomenon referred to as “sudden wealth syndrome”. People who are not used to having money tend to not make wise financial decisions once they have access to a large inheritance. These funds are either spent or unwisely invested within an alarmingly short period of time and the damage can be irreparable.

Planning for Wealth Transfer

There are many ways to create a wealth transfer plan. Open communication is at the center of any effective plan. By discussing the future with your family and heirs, you can take steps to prepare them for accepting their inheritance

  • Communicate your values and goals you may have for the inheritance.
  • Make your family aware of your intentions while you are still alive. Let them know who your intended heirs are and what the expected time frame is for fund transfers. By being transparent with your wishes, you can minimize family strife and infighting.
  • Introduce your heirs to your financial advisors, attorneys, tax professionals, and anyone else who may be able to answer their questions. These are the professionals they will be working with when you have passed away and it is important to establish a working relationship early on.
  • Encourage your heirs to work with professionals to establish their own estate planning documents and come up with a plan for the funds they will eventually receive.

Creating a Plan

Estate planning and wealth transfer planning go hand-in-hand. While designating heirs for your physical and financial assets is a step in the right direction, an estate plan without a wealth transfer plan can leave your heirs with an inheritance they are physically and emotionally ill-equipped to handle. This is why it is important when establishing a proper wealth transfer plan to involve experienced professionals.

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