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Legacy Planning for Families: Passing on Your Values and Wealth
Tips to Serve Your Family Now and into the Future Through Smart Legacy Planning for FamiliesAffluent individuals often turn to legacy planning for families to ensure that they protect not only their financial standing but also their values and missions. Some of the steps they may take include designating an executor to manage the distribution of assets, writing a will, and filling out beneficiary forms on retirement accounts. However, these steps are only the start of what legacy planning for families involves. Below, we’ll share tips for building your family legacy in a way that both serves your present needs and preserves your family’s wealth for generations to come.
Understand Your Options
A surprisingly large number of families miss out on some of the most important opportunities to transfer their wealth in a way that’s secure and tax-efficient. One of the most missed key opportunities is account titles. Many spouses choose to title their assets jointly, leading these jointly titled assets to count toward their individual estate tax exemptions when they pass away. Current tax law, however, allows each spouse to own up to the state tax exemption before becoming subject to the tax. By titling assets more strategically, couples can own twice as many assets before having to worry about estate taxes.
Corporate executives and individuals who own businesses might also overlook certain beneficial wealth-planning tactics. For instance, business owners can pass their companies down tax-efficiently, but doing so requires them to begin succession planning years in advance. Executives who have stock options will want to use these options before they expire as well.
To make the most of the available opportunities, it’s essential to work with a qualified financial advisor to understand the options available to you. A professional can point out the best strategies for reducing estate taxes while at the same time helping to make sound decisions for the remainder of your life.
Choose a Non-Family Executor
In the process of legacy planning for families, assigning the role of executor to the eldest child is a common practice. However, it’s not necessarily the best option. Depending on the size and complexity of the estate, being appointed executor can be a full-time responsibility, one that requires a significant amount of financial expertise. This may become an issue for individuals who have ownership stakes in multiple businesses or those with operations in different states where they’re required to file taxes.
Some states also require the executor to attend probate court, meaning they may have to travel. Additionally, the executor might need to turn to various real estate agents to help them sell homes. All of this adds up to a lot of time and effort.
Instead of saddling a family member with these responsibilities, choosing an institution as executor can be the better call. An institutional executor will adhere to all key state laws and protocols while keeping the family updated and helping you avoid the kind of conflicts that are common when a family member is appointed executor.
Review and Revise Regularly
Perhaps the most common error in legacy planning for families is failing to update paperwork. It’s crucial to review all financial paperwork to avoid possible complications following any major life event that occurs within the family, including marriage, divorce, birth, death, and new money-making opportunities.
Even if there haven’t been any major life events, it’s still a good idea to revisit all financial paperwork with your financial advisor every three to five years. They’ll be able to point out any changes in tax laws or your personal financial situation that could impact your assets.
Opt for Customized Plans
Every family is different and will face unique challenges, making it vital to have a unique legacy plan that reflects this reality. It’s particularly important for parents to think about what their children will receive, as certain concerns or obstacles may disqualify a particular child from being considered the best recipient of the family assets. For instance, if a child has substance abuse issues or mental health concerns or lacks a sound work ethic, making other arrangements may serve to protect a family’s wealth.
Trusts are powerful tools in legacy planning for families in these instances. Some trusts will pay out funds to the beneficiary if they earn an income, with select options even paying out dollar-for-dollar amounts. These types of arrangements can help incentivize the beneficiary while preventing them from spending the assets all at once.
Prepare Your Heirs
Money is a very personal matter, and it can be difficult to talk about the specifics of your assets and inheritance plans, even with your closest loved ones. Many people choose to withhold this information out of fear that it will curb their loved ones’ motivation to accomplish their goals or spark conflicts between family members. However, open and honest communication is a crucial part of preparing heirs to inherit family assets.
A beneficiary who isn’t aware of what they’ll inherit – and is subsequently handed a complex estate, business, foundation, or other investment – likely won’t be ready to manage it. Instead of keeping your heirs in the dark, it can be helpful to give them at least a basic understanding of how to manage various family assets so they don’t make costly mistakes once they come into possession of them.
With that in mind, take your heirs to meet the family’s financial advisor as part of your legacy planning for families process. Doing so will give them not only a more thorough understanding of the family’s wealth but also someone to call on after the head of the family passes away.
Another crucial aspect of legacy planning is ensuring that the family’s values are respected. Addressing family history and philanthropic goals while demonstrating how they connect to family wealth helps beneficiaries understand what they should focus on in the future.
For most families, successful legacy planning for families involves offering clear family objectives. This means providing age-appropriate transparency and creating a positive learning environment so that financial literacy receives intentional focus.
Legacy Planning for Families: Looking Ahead
Dealing with end-of-life topics isn’t easy for anyone, which is why too many people avoid these conversations until it’s too late. If you’ve spent your entire life building your wealth, you want to do everything possible to ensure that it’s safe when you’re no longer there to manage it. That’s what legacy planning for families offers — it allows you to provide for your family while preserving your core values and passing them onto the next generation.
By turning to reliable strategies like choosing a non-family executor, communicating with your beneficiaries, opting for customized plans, understanding all of your options, and regularly reviewing your financial paperwork, you can effectively safeguard your life’s work through the legacy planning for families process.
Having a trusted and experienced financial advisor on your side to help you navigate the process of legacy planning for families will help you avoid common pitfalls while ensuring that your heirs have the support they need at all times. With the right people on your team, you can safely pass on your values and wealth to future generations without burdening your beneficiaries or leaving your wishes unfulfilled.
Contact Lane Hipple Wealth Management Group at our Moorestown, NJ office by calling 856-406-5120, emailing info@lanehipple.com, or to schedule a complimentary discovery call, use this link to find a convenient time.
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Crucial Estate Planning Steps Before It’s Too Late
Countdown to the sunset of the 2017 Tax Cuts and Jobs Act has started
As 2026 approaches, the financial and legal communities are abuzz with discussions about the imminent sunset of the 2017 Tax Cuts and Jobs Act. For many, this translates to pressing changes affecting estate planning.
With only two years left to address these modifications, it’s imperative to understand the urgency and take action now.
Understanding the Impending Estate Planning Changes
The 2017 Tax Cuts and Jobs Act introduced favorable estate tax provisions, offering a hefty federal estate tax exemption of $12.92 million per person. However, by January 1, 2026, this exemption is set to drop significantly to roughly half its current value, adjusted for inflation.
Related Article: What to Do Before the Tax Cuts and Jobs Act Provisions Sunset
Why Immediate Action is Essential
Estate planning is not a process to be hurried. Comprehensive strategies, especially ones revolving around gifting to trusts or establishing gifting vehicles, demand time. Here’s why immediate action is crucial:
Short Planning Window: Two years might seem adequate. However, in the realm of estate planning, it’s but a blink of an eye. Advisors and clients alike must act swiftly.
Overwhelmed Attorneys: As the 2026 deadline approaches, estate planning attorneys will inevitably face a surge in demand. This influx means many attorneys might stop accepting new clients long before the deadline, leaving procrastinators in a lurch.
Maximizing the Exemption: By acting now, you’ll make the most of the current exemption before it reduces, potentially saving millions in estate taxes.
Estate Planning Steps Clients Should Take Immediately
Consult Your Advisor: If you haven’t already, now is the time to meet with your financial advisor. They can provide insights tailored to your unique financial situation.
Review Your Current Estate Plan: Understand the implications of the looming changes on your existing estate plan. A periodic review is always advisable, but now it’s non-negotiable.
Consider Gifting: With the high exemption limit, consider gifting assets to trusts or using other gifting vehicles. It’s a prime opportunity to move wealth out of your estate and leverage the generous exemptions.
Engage an Estate Planning Attorney: Given the anticipated demand surge, seek out and engage a reputable estate planning attorney sooner rather than later.
Stay Updated: As we inch closer to 2026, there might be new legislative changes, court rulings, or other factors impacting estate planning. Regularly check in with your advisor to stay abreast of these changes.
Act Now
The countdown to the sunset of the 2017 Tax Cuts and Jobs Act provisions is more than a looming date on the calendar; it’s a clarion call for immediate action. As a client, seizing the moment now can mean securing a more stable financial legacy for your heirs.
Don’t wait until it’s too late; the time to act is now.
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Passing an Inheritance to Your Children: 8 Important Considerations
Choosing to Leave an Inheritance Can Impact Many Other Financial Planning Decisions
If you have worked hard and planned properly, you may be well situated to leave an inheritance to your children. It can feel very meaningful to be able to provide a financial legacy for your loved ones, but it’s important to be practical, too, and to go about your estate planning in the right way. This single decision can impact all of your financial decisions, such as how much you put into savings, the types of retirement accounts you utilize, and your strategy for taking distributions.
Make sure you’ve covered all your estate planning bases by reading through these eight considerations for passing an inheritance to your children.
1. Your Personal Income Needs
Generosity feels good, but it must be wise, too. Don’t make the mistake of giving away more of your retirement savings than you’re truly able to. While the decision to provide for your children can be a very emotional one, it’s important to be financially savvy about it. Determine your own monthly or annual income needs, then use a retirement calculator like this one to help you develop a savings and withdrawal plan.
2. Rising Healthcare Costs
It’s important to remain vigilant about planning to pay for an unexpected illness or injury – and the medical bills that come with them. These costs pose a risk to your retirement and to your heirs’ inheritance, and there’s no good way to predict how much you could need. It’s also risky to rely on government programs like Medicare and Medicaid because they don’t cover everything. One potential option to explore is long-term care insurance. It offers protection for your assets in the event of catastrophic illness. However, policies can be quite expensive and aren’t wise investments for everyone.
3. Outliving Your Nest Egg
One of the most common retiree fears is running out of money in retirement. Make sure you have a plan to manage your savings and withdrawals appropriately so you can avoid depleting your assets while you’re still alive. If your goal in estate planning is to leave an inheritance for your children, the last thing you want is to saddle them with paying your bills as you age.
4. Tax Liability
When you leave an inheritance to your children, consider how best to protect them from significant tax liability. The choices you can make now can help them to enjoy more favorable tax treatment when you’re gone. For example, inherited stocks and mutual funds are eligible for a step-up in basis that could lead to significant savings.
Be mindful, too, about the rules for inheriting IRAs, such as the requirement that non-spousal beneficiaries take full distribution of the amount inherited within ten years. Formerly, heirs could take advantage of a “stretch IRA” that allowed them to stretch distributions over their entire lives. However, the stretch IRA was eliminated by the Setting Every Community Up for Retirement Enhancement (SECURE) Act in 2019. Some exceptions to this remain for a child who is not yet 18, for those who are disabled or chronically ill, and for heirs who are less than ten years younger than the owner of the IRA
SECURE Act 2.0: What It Means For Your Retirement
5. The Advantages of a Trust
Some estate planning tools can allow you more control when you want to leave an inheritance. A trust, for instance, will control distributions on behalf of your estate. This can help you ensure that specific assets pass to the children you designate them to. For this reason, a trust can be particularly useful for blended families where one or both spouses have children from previous relationships.
6. Wise Investment Decisions
You should always choose your investments wisely, whether you hope to leave an inheritance or not. However, if it is your goal to pass inherited assets to your children, then you need to design a portfolio that will last for several generations. You want your investment portfolio to continue to grow, preserve capital, and generate income. You should also do everything you can to avoid dipping into the principal for withdrawals. When you’re estimating the amount that you’ll be able to use to leave an inheritance to your children, don’t neglect to consider both compound interest and inflation.
7. Options for Carrying Out Your Legacy
Estate planning isn’t one-size-fits-all, and there are several options to choose from to leave an inheritance:
Gifts
If you choose to, you can gift assets to your children and allow to make use of your money before you die. If they qualify as annual exclusion gifts, they won’t be subject to the gift tax. This makes them completely tax-free and not subject to IRS filing. This strategy is also advantageous in that you can use a separate annual exclusion for each person to whom you make a gift. While your recipients won’t receive the step-up in cost basis, any capital gains will be taxed at their rate (rather than yours) which may be higher.
Trusts
Trusts are advantageous when you choose to leave an inheritance because they avoid probate, maintain privacy, and protect your heirs’ interests. You can select an individual or a company to act as your trustee to manage distributions according to your wishes. A revocable trust allows you to maintain control of the assets during your lifetime, while an irrevocable trust is treated as a gift that you cannot control or take back into your possession. Examine which type might benefit your estate planning goals.
Deferred Income
Certain retirement accounts, including IRAs and 401(k) plans, defer taxes on capital gains, interest, and dividends until the funds are withdrawn. When they are, they’re taxed as ordinary income. If you believe you will be in a higher tax bracket in retirement than you are in currently, you might look into using a non-deductible IRA. It’s a tool that allows earnings to grow tax-free, and there won’t be any taxes upon withdrawal either.
Life Insurance
Life insurance offers several estate planning benefits if your goal is to leave an inheritance to your children. If you have a policy, your beneficiaries receive the money tax-free. They won’t be required to go through probate, and there are no concerns about market fluctuations impacting the dollar amount. If life insurance is an attractive option for you, you might also consider fixed or variable annuities. They allow you to invest in the stock market through mutual funds, but they also have a life insurance component. Many times, they also carry hidden fees, so be cautious before taking this route. It’s usually best to discuss your options with a trusted financial advisor before you purchase an annuity product.
8. Estate Planning Legal Details
After you determine the mechanics of your estate plan, work with an estate attorney or a financial planner who specialized in estate planning to ensure you have everything in writing. This also gives you a chance to ask questions about beneficiary changes, probate laws in your state, and whether you’ve included all necessary items in your will. You should feel comfortable and confident in the estate plan you’ve created to leave an inheritance to your children, so be diligent and intentional in getting all the information you need from the professional you’re working with.
If you think you would benefit from a conversation about estate planning and how best to leave an inheritance to your children, contact Lane Hipple Wealth Management Group at our Moorestown, NJ office by calling 856-406-5120, emailing info@lanehipple.com, or to schedule a complimentary discovery call, use this link to find a convenient time.
Illuminated Advisors is the original creator of the content shared herein. I have been granted a license in perpetuity to publish this article on my website’s blog and share its contents on social media platforms. I have no right to distribute the articles, or any other content provided to me, or my Firm, by Illuminated Advisors in a printed or otherwise non-digital format. I am not permitted to use the content provided to me or my firm by Illuminated Advisors in videos, audio publications, or in books of any kind.
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Don’t Get Spooked by Estate Planning
Tackle Your Estate Planning Fears and Plan for the Future
Nothing strikes fear into the hearts of adults quite like estate planning, and it’s about more than the technicalities of creating a will or a trust. Estate planning brings up anxiety about the end-of-life, fear about what will happen to future generations, and concerns about how much weight the plan itself could hold over the course of your own life.
Certainly, it can be difficult to confront the what-ifs of the future, but it’s critical to plan ahead. Putting off an estate plan isn’t a viable strategy. If you’ve been hesitant, review the estate planning fears below and learn how to overcome them.
1. Catastrophes and Tragic Accidents
We’ve all had irrational fear creep in from time to time, whether you’re scared of venomous snakes or terrified a train will hop off the rails. It won’t surprise you then that many people make an appointment with a professional before they take a flight, no matter how short or long.
Though crash landings could hypothetically occur, it’s incredibly unlikely. In fact, it’s far more common for someone to need long-term care or develop an end-of-life illness than to die in a plane crash. While revisiting or creating your estate plan is a good idea under almost any circumstance, fear of a freak accident shouldn’t be the only impetus. An estate plan includes health directives and assigns power of attorney – the right for someone to make financial or medical decisions on your behalf – which is important to have in place in a multitude of circumstances.
2. Over-Considering Contingencies
Just like it’s unlikely a plane crash will cause your demise, it’s (thankfully) equally unlikely that some catastrophic event will take out your entire immediate family. That’s a great comfort in many ways, but even the extremely unlikely possibility that it could occur is enough to twist people’s minds into an estate planning pretzel.
Analysis paralysis, the inability to move forward with a decision because of overthinking the issue, can set in. When faced with that difficult scenario, it can feel equally impossible to pick a charity or next-tier contingent beneficiary.
So, how do you proceed? Consider your options thoughtfully, but also as quickly as possible. Agonizing over what would happen if everyone you love passes away simultaneously isn’t helpful to your state of mind or your estate. Choose a contingency plan you’re comfortable with and move forward.
3. ‘Do and Then Die’ Thinking
It’s a common, but faulty, fear that the grim reaper will come for you the moment you sign the dotted line on your estate planning documents. Facing mortality head-on can make you forget all logic in favor of the what-ifs.
One trick that can help you get past this kind of thinking is to remind yourself that you can change your plan whenever you like. Though the document should accurately reflect your current wishes, thinking of your estate plan as a first draft can help you overcome the illogical reasoning that a completed will means you’ll be meeting your demise soon.
Financial Goal-Setting Tips to Help Achieve Your Money Goals
1. Decisions = Family Discontent
Money can be a divisive topic in some families, which is why a common estate planning fear is stirring up conflict in your family. Though making estate planning choices can seem difficult, having any plan in place – even a flawed or clandestine one – is better than not having any plan at all.
It’s easy to become overwhelmed by the thought of causing family trouble, but try to think past it. If tragedy strikes, it would be even more challenging for your family if there’s no estate plan to guide the ones you leave behind.
2. Too Complicated, Too Costly
Doing anything that requires an attorney is enough to spook people, especially when it comes to estate planning. Many people fear the complications or the cost. On average, professionally done estate plans cost around $2,500, which can be a hefty sum to swallow. But consider this: if your home is valued at $500,000 and you have no estate plan to protect it, it will cost roughly $40,000 when it goes through probate.
If your financial situation is holding you back, it can be difficult to prioritize something that feels far off. However, it’s worth saving up now for a professionally prepared will or living trust to protect your assets and your loved ones in the future.
3. Limited Time Only?
There’s a common misconception that an estate plan is somehow structured like a warranty—that it will run out after a period of time. However, there’s good news if this is what’s been holding you back—these documents are valid until revoked or amended. There’s no need to fear that your plans will expire or that your hard work will go to waste.
Estate Planning: There’s No Time Like the Present
If you think you would benefit from expert help to dispel your estate planning fears and get your assets in order for your heirs, contact Lane Hipple Wealth Management Group at our Moorestown, NJ office by calling 856-638-1855, emailing info@lanehipple.com, or to schedule a complimentary discovery call, use this link to find a convenient time.
Illuminated Advisors is the original creator of the content shared herein. We have been granted a license in perpetuity to publish this article on our website’s blog and share its contents on social media platforms. We have no right to distribute the articles, or any other content provided to our Firm, by Illuminated Advisors in a printed or otherwise non-digital format. We are not permitted to use the content provided to us or my firm by Illuminated Advisors in videos, audio publications, or in books of any kind.