Forefront

Your will may not determine who inherits everything you own.

Different assets can transfer in different ways, which is why your will is only one part of your estate plan.

For example:

• Retirement accounts, life insurance policies, and annuities generally transfer according to the beneficiary designations on the account or policy.

• Property owned jointly with rights of survivorship generally passes directly to the surviving owner.

• Your will generally directs the distribution of assets that do not transfer through another method.

• A trust generally controls the assets that have been formally transferred into it.

This is why it’s important to look at your estate plan as a whole.

Your beneficiary designations, asset titling, will, and trust should work together so your assets transfer according to your intentions.

Our Estate Planning 101 guide explains how these pieces work together and covers other fundamentals to consider when building or reviewing your estate plan.

Read the full guide,

https://forefrontwealthpartners.com/estate-planning-101-a-comprehensive-guide-to-protecting-your-legacy/

A year-end financial review uncovered $1.6 million in unprotected assets.

During this review, Susan mentioned that her home insurance premiums had increased by almost $2,500 a year.

As we continued looking through her financial picture, we realized her lake house didn’t have the appropriate asset protection in place.

After a deeper review, roughly $1.6 million of her assets were exposed.

We explained how an umbrella insurance policy could provide additional protection and brought in a trusted insurance partner to review her home, auto, and umbrella coverage.

Susan was relieved that we had taken the time to look deeper.

And we kept going.

Susan has two adult children who are building families and careers of their own, so we talked about her estate plan for her kids.

We reviewed the revocable living trust we had previously helped coordinate with our estate planning partners.

We also discussed tax planning strategies for her beneficiaries.

After the review, Susan sent us an email:
“Thanks for the financial review. I always learn something from our talks.”

Estate planning is part of an ongoing financial plan.

As your assets and family change, your advisor can help you revisit the plan and coordinate with your estate attorney when updates may be appropriate.

Who gets your assets is only one of the decisions your estate plan needs to answer.

Before you sit down to create a will or trust, you need to decide what you actually want that plan to accomplish.

Start with these five questions:

1. Who should inherit your assets?
Your beneficiaries may include your spouse, children, grandchildren, other people you care about, or organizations that are important to you.

2. How and when should they receive their inheritance?
You may want assets distributed immediately, or you may want to establish guidelines for when and how certain beneficiaries receive them.

3. Who should handle your financial decisions if you can’t?
Your financial power of attorney gives someone you trust the authority to manage financial matters on your behalf.

4. Who should make healthcare decisions for you if you can’t?
Your healthcare power of attorney identifies the person you trust to make medical decisions when you are unable to make them yourself.

5. Who should care for your minor children if something happens to you?
Choosing a guardian is one of the most important decisions parents make as part of an estate plan.

Your will or trust documents these decisions.

The planning starts with deciding what you want for yourself, your family, and the assets you’ve spent your life building.

What does an integrated financial advisor actually help you with?

For many people, the first answer is investments.

That’s one part of the job.

An integrated financial advisor looks across your financial life and helps you understand how different decisions affect one another.

That can mean:

• Building an investment strategy around your goals, timeline, and risk tolerance.

• Identifying tax planning opportunities and coordinating with your CPA.

• Planning for retirement by looking at your savings, income, spending, healthcare costs, and long-term goals together.

• Working alongside your estate attorney to help keep your estate plan and financial plan aligned.

• Reviewing insurance coverage and identifying areas where additional protection may be appropriate.

• Helping business owners think through growth, a future sale, or succession within their broader financial plan.

• Helping employees understand how equity compensation affects their taxes, investments, and long-term goals.

• Reviewing cash flow, savings, debt, mortgages, and other liabilities.

Your financial life is connected.

A decision about retirement can affect your taxes.

Selling a business can affect your estate plan.

Exercising company stock can change your investment strategy.

An integrated financial advisor helps you see those connections and make informed decisions with the full picture in mind.

If you’d like a deeper dive into how integrated financial advisors can help you, read the blog, https://forefrontwealthpartners.com/what-does-an-integrated-financial-advisor-do/

A will and a trust can leave your family with very different experiences after you pass away.

With a will-based estate plan, assets controlled by your will generally go through probate before they are distributed to your heirs.

With a trust-based estate plan, assets properly titled in the trust can generally pass to your beneficiaries without going through probate.

A trust can also give you more control over what happens next.

You can decide whether an inheritance is distributed all at once or over time.

You can establish instructions for how assets are managed for younger beneficiaries.

And because a revocable living trust exists during your lifetime, a successor trustee can manage assets held in the trust if you become unable to manage them yourself.

There is also an important detail people sometimes miss:

A trust-based estate plan still includes a will.

A pour-over will can direct certain assets that were never transferred into the trust, and a will allows parents to nominate guardians for minor children.

Choosing between a will-based and trust-based plan depends on your family, assets, and goals.

The bigger question is whether the estate plan you have will work the way you expect when your family needs it.

Financial planning isn’t about having more strategies.

It’s about reducing friction.

You can have a great CPA, financial advisor, estate attorney, retirement plan advisor, and insurance professional.

But good advice can still become disconnected when each professional is working with only one piece of your financial life.

A tax decision can affect your investment strategy.

An estate planning decision can affect your beneficiary designations.

Changes in your business can affect your retirement plan, insurance needs, and personal financial plan.

Each decision creates a ripple effect.

So how do you know if your financial life is actually integrated?

Start with three questions:

1. Have your advisors spoken to each other this year?
2. Does each advisor understand the major decisions being made in other areas of your financial life?
3. Is someone looking across the entire picture and asking how one decision could affect everything else?

If you can’t confidently answer those questions, that’s a useful place to start your next planning conversation.

You may already have the right people in place.

The next step is making sure they’re working together.

If you’d like to learn more, read our blog titled, Why Successful Business Owners Don’t Have a Tax Problem. They Have a Coordination Problem.

https://forefrontwealthpartners.com/why-successful-business-owners-dont-have-a-tax-problem-they-have-a-coordination-problem/

Before asking what your business is worth, figure out what you need it to accomplish.

That's where your wealth gap comes in.

Your wealth gap is the difference between the personal wealth you have today and the financial resources you'll need to support the life you want after you exit your business.

You can start estimating yours in three steps:

First, define the future you're planning for.

Think about the lifestyle you want after business ownership and establish your net worth goal.

Second, calculate your current personal net worth.

For this exercise, leave the value of your business out of the calculation.

Third, calculate the difference.

Subtract your current personal net worth from your net worth goal.

That difference is your wealth gap.

Now you have a financial target your eventual business transition needs to help fund.

Knowing what your company is worth is useful.

Knowing what you need from it gives that number context.

If you’d like to learn more, read our blog Business Exit Planning: The Three Financial Gaps Every Business Owner Should Measure.

https://forefrontwealthpartners.com/business-exit-planning-the-three-financial-gaps-every-business-owner-should-measure/