aura wealth advisor
17 Nov

What you Need to Know About Legacy Planning

On: 17th November, 2015   //   By: admin

Taking Legacy Planning Steps That Fulfill Your Vision

Many investors confuse legacy planning with estate tax planning. While you certainly want to have a plan to optimize your tax profile, you also want to dedicate time and consideration to legacy planning. It involves more than minimizing the tax on your estate, and can ensure that your estate has a lasting positive impact.

Goals of legacy planning include:

Financial security: Once you have accumulated wealth, it may seem that financial security is a given. However, one of the goals of legacy planning is to protect the assets you have accumulated. You are best able to give or provide for your loved ones when your own standard of living is well-protected and secure.

It’s important that, at each decision point, you ask yourself whether a particular plan might put your own standard of living at risk, even if only in certain circumstances. The events of 2008, with asset prices plummeting, demonstrated the importance of protecting your wealth. Once you have established guidelines to keep your wealth protected, you can make decisions about the disposition of your wealth to loved ones.

Stewardship transition: In many estates, wealth begins to dwindle once the first owner passes the assets on to the beneficiaries. This is an effect felt most strongly in situations where a business is being passed along to the next generation. It’s important to consider that stewardship can be distributed in ways that protect the wealth, between owners, managers and beneficiaries. However, even an estate without a business needs a stewardship transition plan to ensure that wealth is protected.

Protection: A key element of legacy planning involves protecting the estate, a goal that is particularly important for small business owners. There is a need to protect assets from potential creditors and lawsuits. This usually involves simply placing funds in simple, low-cost options, such as trusts or limited partnerships. Your wealth advisor can help you make decisions about the best ways to protect the estate.

Tax considerations: Legacy planning should always include a strategy for transferring wealth with the lowest possible tax burden. Many individuals with accumulated wealth consider themselves to be middle class and ignore legacy planning because they do not realize the potential tax burden on their estate. “Hidden assets,” such as annuities and life insurance, are included in the taxable estate and are easily forgotten unless careful legacy planning is conducted.

Even if you have considered all of these elements, it can be easy to overlook other factors that impact your tax bill on your estate, such as state inheritance taxes and income taxes on beneficiaries. If you do not plan for the tax impact on your beneficiaries, your loved ones may be impacted.

At Aura Wealth Advisors, we take time to conduct personalized legacy planning that takes into account not only the practical steps of protecting your wealth and preparing for the tax burden, but also recognizing and planning for your hopes and dreams for your wealth. We act as your Chief Financial Officer, carrying out your desires for your estate with the benefit of a team of financial experts. Call us today for an initial consultation.

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