Estate planning is important for everyone. However, if you are a resident of Fayetteville and have been fortunate enough to build a solid financial base, it is even more critical to plan how your legacy will be passed on to your family. If not, your hard work and success may not be preserved for those you love.
The purpose of legacy wealth planning is to assist clients in preserving their financial wealth through the use of estate planning instruments such as living trusts, wills, powers of attorney, irrevocable trusts, charitable giving and other tools. When these tools are used to create a comprehensive plan for the future, the benefit is invaluable. The most common wealth planning issues to be considered include asset protection, avoiding or reducing estate taxes and charitable giving.
What is Asset Protection?
Asset protection essentially means shielding the assets that may be subject to claims by creditors and placing them out of reach. This is important because legal judgments and certain debts can have serious consequences for those family members who survive you.
Keep in mind that most states have laws that protect creditors who have valid judgments from those who attempt to transfer assets into someone else’s name for the sole purpose of avoiding that judgment. Therefore, asset protection cannot begin once the threat of a judgment is realized. Instead, financial goals must already be in place so that an estate planning attorney can assist in determining which assets are exempt from creditors. Those that are not can be repositioned, in advance of a possible judgment, in order to be protected from potential creditors.
A comprehensive estate plan should address issues such as who will look after you and your property if you ever become incapacitated and unable to make your own decisions. Also, if you have children, think about who will care for them if you die while they are still minors.
Most estates are not required to pay federal estate or gift taxes because we are each allowed to give away up to $5.34 million in property before we incur taxes. If, however, your assets exceed that amount, you need an effective legacy wealth plan that will help reduce the impact of estate taxes. Effective legacy wealth planning can reduce the impact of estate taxes. Some states also collect an estate tax. Arkansas is one of many states that does not.
Charitable donations have tax advantages that can be utilized in legacy wealth planning. The federal government has created tax deductions for donations to qualified charities in order to encourage philanthropy. Remember that if you leave a specific dollar amount to charity it could have an impact on the amount of your assets left to be distributed to your heirs. Leaving a percentage of your estate may be a better option.
These are just a few of the issues you should consider when you are planning for the future. To discuss these situations, and more, feel free to contact our firm to request a consultation.