Estate Planning: Building a Plan for Your Family and Financial Legacy

Estate planning is often associated with transferring wealth after death, but a comprehensive estate plan can address much more. It can establish how assets should be managed and distributed, identify who can make financial or healthcare decisions during incapacity, and provide direction for family members and other beneficiaries.

For individuals and families with significant or complex assets, estate planning may also intersect with investment management, taxes, business ownership, charitable giving, and multigenerational wealth planning.

An effective estate plan begins with understanding the different components of the plan and coordinating them with the appropriate legal, tax, and financial professionals.

A Will Is an Important Starting Point

A last will and testament provides instructions for the disposition of certain assets after death and generally identifies the person responsible for administering the estate.

A will may also address other important matters, including naming guardians for minor children.

Without a valid will, assets subject to probate generally pass according to applicable state intestacy laws rather than according to instructions established by the individual.

A will, however, does not necessarily control every asset.

Retirement accounts, life insurance policies, jointly owned property, accounts with transfer-on-death designations, and assets held in trusts may transfer according to beneficiary designations, ownership structure, or the terms of the trust.

That makes coordination among estate documents, account registrations, and beneficiary designations an important part of the planning process.

Planning for Incapacity

Estate planning also addresses what happens if an individual is alive but unable to manage financial or healthcare decisions.

A durable financial power of attorney can authorize another person to handle specified financial matters under circumstances established in the document.

A healthcare power of attorney, healthcare proxy, or similar document can designate someone to make healthcare decisions when the individual cannot make or communicate those decisions personally.

Advance directives may also provide instructions regarding certain medical care.

The terminology and legal requirements for these documents vary by state. An estate-planning attorney can help determine which documents are appropriate and how they should be structured.

Planning for incapacity can be just as important as planning for the eventual transfer of assets because it provides a framework for decision-making during the individual's lifetime.

Understanding the Role of Trusts

Trusts can serve a variety of purposes within an estate plan.

A revocable living trust, for example, may be used to hold and manage assets during an individual's lifetime and provide instructions for their administration after death or incapacity.

When properly established and funded, certain assets held in a revocable trust may transfer without going through the probate process.

Other types of trusts may be designed for different objectives, including providing for beneficiaries, charitable planning, estate-tax planning, asset management, or multigenerational wealth strategies.

Trusts are not appropriate or necessary in every situation, and simply creating a trust does not automatically accomplish the intended objective. Assets may need to be properly titled or transferred to the trust, and the document should be coordinated with the rest of the estate plan.

Because trust structures can have significant legal and tax consequences, they should be developed with qualified legal and tax professionals.

Review Beneficiary Designations

Some of the most important estate-planning instructions may exist outside the will.

Retirement accounts, life insurance policies, annuities, and certain other financial accounts commonly use beneficiary designations to determine who receives the assets.

Those designations should be reviewed periodically, particularly after major life events such as marriage, divorce, the birth or adoption of a child, the death of a beneficiary, or a significant change in financial circumstances.

An outdated beneficiary designation can create an outcome that differs from the individual's current intentions.

Beneficiary designations should therefore be considered alongside the will, trusts, and broader estate plan rather than treated as isolated administrative forms.

Coordinate Investment and Estate Planning

Investment decisions can affect estate-planning objectives, and estate-planning decisions can influence how investments should be managed.

For example, an investor may own assets across taxable accounts, retirement plans, trusts, business interests, real estate, and charitable structures. Each may have different ownership, liquidity, tax, and transfer considerations.

An estate plan may also create different investment needs for different beneficiaries.

Assets intended to support a surviving spouse may require different liquidity and risk considerations than assets intended for younger beneficiaries or future generations.

Investment advisors, estate-planning attorneys, and tax professionals may therefore need to coordinate when significant investment assets are involved.

The objective is not for one professional to replace another, but for each professional's work to fit within the same overall plan.

Consider Business and Concentrated Assets

Estate planning can become more complex when a significant portion of family wealth is represented by a privately held business, concentrated stock position, real estate portfolio, or other illiquid asset.

A business owner may need to consider succession, ownership transfer, valuation, liquidity, and management continuity.

Families holding concentrated investment positions may need to evaluate how those assets would be managed or transferred if the owner dies or becomes incapacitated.

Liquidity deserves particular attention.

An estate may have substantial value while holding relatively little cash. Taxes, expenses, debts, business obligations, or distributions to beneficiaries can create liquidity needs that should be considered before they arise.

Incorporate Charitable Objectives

Charitable giving can also be integrated into an estate plan.

Some individuals make direct charitable bequests through their estate documents. Others may use donor-advised funds, charitable trusts, private foundations, beneficiary designations, or other arrangements depending on their objectives and circumstances.

The appropriate structure depends on factors such as the assets involved, timing of the gift, desired level of family involvement, tax considerations, and the donor's charitable goals.

Charitable strategies should be evaluated primarily in the context of the individual's philanthropic objectives, with potential tax consequences reviewed by qualified professionals.

Include Digital Assets in the Conversation

Modern estate planning increasingly involves digital property and online accounts.

These may include financial accounts, cryptocurrency, digital business assets, cloud storage, email, social media, websites, domain names, and electronically stored documents or photographs.

Individuals may want to maintain an inventory of important digital accounts and provide appropriate instructions for how they should be handled.

Access to digital assets can involve both practical and legal considerations. Simply sharing passwords may not provide another person with legal authority to access an account.

An estate-planning attorney can help determine how digital assets and appropriate access provisions should be incorporated into the plan.

Review the Plan as Circumstances Change

An estate plan should not necessarily remain unchanged for decades.

Life events can affect both the plan and the assumptions behind it. Marriage, divorce, births, deaths, relocation, business transactions, retirement, changes in wealth, charitable priorities, and changes in applicable law may warrant review.

Even when no major event has occurred, periodic review can help identify outdated beneficiaries, trustees, executors, powers of attorney, account registrations, or other provisions.

The investment portfolio should also be reviewed when estate-planning changes materially affect liquidity needs, beneficiaries, time horizons, or other financial objectives.

Building a Coordinated Estate Plan

Estate planning is ultimately about establishing a clear framework for managing and transferring assets according to an individual's objectives.

A will, powers of attorney, beneficiary designations, trusts, healthcare directives, and other documents may each play a role. The appropriate combination depends on the individual's family, assets, objectives, and applicable law.

For investors with substantial or complex wealth, coordination can be particularly important because estate planning may overlap with portfolio management, taxes, business succession, philanthropy, and family governance.

At Parkview Partners Capital Management, investment planning can be considered within the context of a client's broader financial and legacy objectives while working alongside the client's legal and tax professionals.

An investment advisor does not replace qualified estate-planning counsel. Coordinating these disciplines, however, can help ensure that investment decisions and the estate plan are working toward the same long-term objectives. At Parkview Partners Capital Management, we understand the complexities of building a lasting legacy. To discuss how these strategies might apply to your specific situation, contact our team for a personalized consultation.