C O V E R S T OR Y
“ Gifting gives you an opportunity to fi nd out the fi nancial acumen, or the potential, of a benefi ciary. And it may give you a lot of joy to see how it benefi ts your family while you’re still alive.”
So, how do you ensure you’re taking all the necessary
steps to preserve your wealth and have it passed along according to your wishes? Here are five tips for building a lasting legacy:
opportunities to transfer their wealth more effectively and tax effi ciently. They should consider working with an advisor who can point them toward steps that will help reduce their estate-tax obligations or maximize their wealth while they’re alive. Account titles, for example, are one commonly missed
1.
opportunity. Many couples jointly title all of their assets. When they pass away, all jointly titled assets will count toward both of their individual estate-tax exemptions ($5.43 million in 2015). However, current tax law allows each spouse to own up to the estate-tax exemption before incurring the tax. By strategically titling assets instead, couples could own as much as twice as many assets before incurring the estate tax. Corporate executives and business owners also overlook
key wealth-planning moves when they’re not careful. Executives with stock options, for example, will want to make sure they exercise those options before they expire, which is typically after 10 years, Furlong says. Business owners have many opportunities to pass their business along to their heirs tax effi ciently, but they often need to start succession planning years in advance to take full advantage of those opportunities. (See Your Business on page 12 to read about tax-effi cient business-transfer options.)
paperwork. Furlong has seen many problems arise due to the failure to review a form or to make simple decisions. For example, someone may name his or her spouse as the
2. “Family legacy planning is not a one-time event,”
Furlong says. “It needs to be a living and breathing plan that changes as your family changes and as laws change. Surprises can happen that can cause a lot of distress if they’re not adequately prepared for.” Too often, he says, families delay long-term
wealth planning because conversations about death and inheritance are diffi cult to have. But inadequate planning and miscommunication can lead to huge mistakes, similar to the horror stories you hear about in the news: Someone passes away who didn’t leave adequate instructions for how his or her estate should be divided and the heirs end up in an expensive, years-long court battle over the assets. Or perhaps someone didn’t update their estate plan to refl ect changes in their family, giving the bulk of assets to one heir while overlooking others.
benefi ciary on a retirement account or life insurance policy. In the event that the couple gets divorced without updating the beneficiary designation, the assets pass along to the ex-spouse instead of the children or another benefi ciary. Revisit all your fi nancial paperwork upon any major life
event in your family — birth, death, divorce, marriage, business startup, job loss or new job. Even if you haven’t experienced a transition like this for a while, revisit paperwork every three to fi ve years. Your personal fi nancial situation or tax laws may have changed enough to make certain changes worthwhile.
3.
CHOOSE A NON-FAMILY EXECUTOR Many individuals and couples automatically assign
the role of executor to their oldest child. But Furlong has witnessed plenty of cases in which that child would rather not have been given the job, for understandable reasons. Depending on the complexity of your estate, the executor role can become a full-time responsibility and may require
SUMMER 2 015 R EG ION S I N S IG H T S 9
REVIEW YOUR PLAN REGULARLY Another common mistake is failing to update
KNOW YOUR OPPORTUNITIES Many individuals and families miss out on key
PHOTO: VINCO MURKO
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