15 Jun

Tips for Successful Estate Planning

Grant Blindbury

Grant Blindbury

Grant Blindbury has been working in the Investment Advisory industry since 2003 managing assets of affluent individuals and pension plans. Grant earned his bachelor's degree in Business & Economics at the University of California at Los Angeles (UCLA) in 2001. Grant specializes in working with clients approaching or entering retirement and positions them for success by coordinating their most important financial affairs. Grant's goal, as his client’s personal CFO, is to deliver both the financial outcome and experience necessary to accomplish their most important goals. In 2007, Grant earned the professional credential CERTIFIED FINANCIAL PLANNER™ (CFP®). He is president of his local Estate Planning Council and participates in multiple professional learning groups. He is on the Board of Directors for Big Brothers Big Sisters of Ventura County as well as being a “Big” himself. From the outset he was drawn to the client-centric model that fee-based advisory services provided and joined forces with Fields Financial Associates, Inc. He would later partner with the founders of Fields Financial Associates to form FMB Wealth Management. He has been a licensed Investment Advisor since 2003.
Grant Blindbury

When it comes to death and taxes, people often avoid taking the time to plan ahead. Unfortunately, estate planning involves both of these unpopular events rolled into one. In the United States, most citizens will not be required to pay an estate tax because of an IRS tax credit known as a lifetime exemption, which makes the first $5.45 million (or $10.9 million for a married couple) of one’s estate tax-free. However, no matter which side of the line you are on, planning is crucial and there are a number of factors to consider when drafting your estate plan to ensure the longevity and protection of your assets for many generations.

Here are just a few important considerations when drafting your estate plan:

Family Dynamics

As uncomfortable as it may be to admit, some family members may be more reckless or wasteful in their inheritance than others. If you have heirs who you fear may be spendthrifts, addicts, or have broken the law repeatedly, it would not be wise to make them the executor of your estate. While we all want our children to be cared for after we are gone, it is crucial to take an honest look at your beneficiaries and decide if they are responsible enough to inherit the money or if additional protections are needed in your estate plan. In the long run, these added protections should enable your children to actually preserve their inheritance, not waste it away.

Taxation of Assets Upon Death

Current U.S. tax policy allows for an asset’s tax cost basis to be adjusted, or “step up”, after an individual’s death with no capital gains or personal federal income taxes due on the sale. This could lead to significant tax savings on an appreciated stock that otherwise would have been taxed heavily during one’s lifetime. For example, if an individual leaves 5,000 shares of a stock that cost him $10 per share, and the stock’s value is $60 per share at the time of his death, the difference between his cost basis and the value of the stock at the time of death is not taxed. If the individual had sold his assets during his lifetime, however, he would have been taxed handily for capital gains. Therefore, the average American today with an estate of less than $5.45 million is better off deferring the transfer of significant assets until death instead of distributing them to heirs during one’s lifetime.

Gift Tax Exemption

For those with estates worth more than $5.45 million, there are ways to reduce or eliminate estate tax liability altogether through the gift tax exclusion. The gift tax exclusion allows you to gift $14,000 each year per person during your lifetime tax free. These gifted sums do not count toward your lifetime exemption, allowing you to reduce the value of your estate and avoid paying high estate taxes upon your death.

Charitable Contributions

Almost everyone has a cause that’s important to them. Factoring charitable contributions into your estate plan can reward you in more ways than one. Not only will you be doing good and getting a sense of personal satisfaction, but can also help you save money in estate taxes. By leaving money to a charitable organization, the full amount of your gift may be deducted from your estate tax-free. There are several options to leave a charitable gift including an outright bequest of cash to the charity, establishing a charitable trust, creating a charitable remainder trust that provides you and your spouse with a life-time income based on the value of your donation, or making a charity the beneficiary of your IRA or retirement plan. In addition, foundations and scholarship funds can also be set up that will live on and continue to help others even after your lifetime.

Failure to plan is a recipe for disaster. Unfortunately, many individuals fail in planning their estates, leaving their heirs to deal with the repercussions of a poorly planned estate. While none of us can predict when we will die, we can be comforted in knowing that our loved ones will be taken care of by planning ahead.

Estate Planning is a very important part of overall Wealth Management and our process as well.  It is important to stay up-to-date on the latest federal and state estate tax policies and limits to ensure that your estate plan is safe and sound.  We do our best to make sure our clients are protecting their wealth and are keeping their estate plans up to date by reviewing those plans as part of each annual review.  If you have any questions or concerns about your estate plan, reach out to your financial advisor for guidance.  

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