Jim Pratt-Heaney and Michael Kazakewich of Coastal Bridge Advisors Discuss Estate Planning

Did you know that you currently have an estate? Believe it or not, nearly everyone does. Your estate consists of almost everything that you own, from your home to your bank accounts to the shiny pearl necklace sitting on top of your dresser. It doesn’t matter how large or small your estate is right now; we all have one and the fact of the matter is that none of us can take it with us when we pass. Are you prepared for when that time comes? As I believe we all learn, life is full of twists and turns and uncertainties, and you never know what could happen tomorrow. That’s why it’s critical for everyone to consider their estate plans, no matter their stage of life.

So, what is estate planning and why is it so important? An estate plan, simply put, is the result of creating a formalized plan. It encompasses gathering all the information from the client about the wishes they would like to occur and putting them together into a well-structured and articulate format that will accomplish what they set out to do when initiating the plan. Estate planning is vital to any person, couple or family planning out their financial futures. The estate plan will serve as the tool that is directing what happens to everything you own and that is near and dear to your heart, after you’re gone. Part of having a well-drafted estate plan is not only planning for death, but also in case of incapacity. Each day is unique and filled with unknowns, but you can be prepared for life’s unexpected changes by having a plan in place that outlines your wishes and distributes the appropriate power to the people of your choice to execute these wishes.

You may be wondering what happens when there is no will or trust in place when you may no longer be able to make your own decisions. First and foremost, none of our clients are permitted to work with us at the firm unless they have an active will in place. If there isn’t one when they begin to speak with us, then it’s the first thing we set to accomplish.

Now going back to the hypothetical example, in situations like this, things can get extremely complicated and messy quickly, which is why we believe it’s so important to set an estate plan in motion for our clients. Our goal is to uncomplicate our clients’ financial lives. And, we may have heard stories among friends or in the media regarding how ugly it can get; two well-known celebrities, Prince and Aretha Franklin each passed away with reportedly nothing left behind to guide their families in dividing each of their estates. Without the proper guidance such as that available in a will or in an estate plan, families are often left to decide for themselves. We believe this can cause undue conflict, particularly when people thinking they were entitled to certain things while others disagreed. On top of potentially causing rifts or conflict amongst your family members and loved ones, not having a will gives the court system robust power in determining how your estate will be handled. It also, then, becomes the court’s responsibility to manage the process; This renders the estate evaluation and award process publicly accessible, and many individuals and families lose control of privacy.

Key Benefits to Working with an Advisor on an Estate Plan

  1. Create a will that clearly spells out how your assets will be distributed among your heirs and favorite charities.
  2. Establish a trust in a state that offers strong legal protections and no taxes on income earned by trusts.
  3. Manage the investment assets in your trust to achieve an ideal balance of income generation and long-term growth.

Key Mistakes to Avoid When Creating Your Estate Plan

  1. Not making your wishes clear enough in your will, resulting in conflict and potential legal challenges among your heirs
  2. Neglecting the state-level estate taxes that kick in at estate value levels much lower than federal estate taxes
  3. Not knowing which of the assets in your estate may be subject to probate and failing to remove them

Client Success Story

We are so grateful that we have the privilege of helping people each day. We’ve seen clients come through that eventually developed Alzheimer’s, but luckily, we had their plan in place prior to their diagnosis. We’ve also sadly seen clients who have suddenly died at a very young age, but again thankfully we had already worked with them and their families to set up trusts to assist the remaining loved ones. One client story that sticks out to me came to us with a significant amount of assets. This client had done some periodic charitable giving and had already gifted some money to her family; However, she wanted to leave her kids something meaningful, while avoiding estate taxes. Working hand and hand with her and our knowledgeable team, we were able to set up trusts that skipped her kids, were earmarked for her grandchildren, and then for any amount of money over the estate allowance that would be subject to taxes, we helped her set up a foundation that would be the beneficiary.

We applied this solution because when the foundation is funded at the time of her passing, her estate receives a tax deduction. Additionally, her children will be able to decide to which charities the foundation will donate. We believe our client was feeling relieved knowing that her hard-earned money wouldn’t be just going to the government, and she was able to surprise her children with the fact that her grandchildren (her children’s children) would have trusts set up for them. She accomplished her goal of aiding her children by alleviating some of the pressure and stress that they would likely encounter when trying to plan and provide for their children’s futures. We strived to help her and her family focus less on money and their finances and devote more time to raising their family and spending quality time with one another. We believe it was a well thought out approach that solved for multiple objectives.

Commonly Asked Questions

  1. How frequently should I update my estate plan?
  2. What should I consider before I meet with my estate attorney?
  3. How can I shield as much of my estate as possible from probate and estate taxes?
  4. What should I do now to ensure my assets are passed on to my heirs according to my wishes?

Whether you’re just starting your career or already well into retirement, planning for your and/or your family’s future is imperative. Estate planning should be one of the many areas considered, no matter what stage of life you’re currently enjoying. Your estate plan will carry along your legacy and provide guidance to those whom you care about deeply, specifically around some of the important decisions you’d like made regarding your assets and wishes when you’re no longer around. When you’re ready to take the first steps to building out your plan, be sure to consult a fiduciary financial advisor who is legally obligated to put your best interests first.

Thank you, Jim and Mike, for this extremely informative and timely guest post, we greatly appreciate the information! Your advice couldn’t come at a better time. If you don’t currently have an advisor or if you’re interested in another perspective on your current investment strategy, be sure to check out Wealthramp’s quick survey that will match you with three fee-only, fiduciary financial advisors in your area. The first advisor meeting is always free and you’re under no obligation to hire any professional. Learn more about the Wealthramp process and be sure to check out Wealthramp’s resources on how to properly invest and diversify your portfolio, among other important tools to help you navigate family planning, loss of spouse, and much more!

This material by Coastal Bridge Advisors is for informational purposes only and is presented solely as an illustration of the typical Advisor experience. Coastal Bridge Advisors does not provide tax or legal advice, and nothing contained in these materials should be taken as tax or legal advice. Unique client experiences and past performance do not guarantee future results.

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