Planning for the future is important. It is no less important when considering legacy planning, which is financial planning for future generations. Legacy planning is thoughtful management of wealth and assets both during life and beyond. This includes estate planning where one or more trusted individuals is put in charge of your assets so that they can be managed in the future with intention and purpose.
As a preliminary matter, get familiar with the general concepts of financial and estate planning. Although the internet should never be used in place of an attorney, reading up on the subjects in advance will facilitate more efficient and informed interactions with legal professionals to achieve your goals. It is helpful to set certain financial and estate planning goals. It is never too early to consider what you would like to achieve and devise ways to go about it. The focus of that planning will vary depending on your stage of life.
Early Years
Young professionals are just beginning to develop their careers and save money for the future. Currently, it makes sense to provide financial protection for a spouse and any young children. Coverdell Education Savings Accounts (ESAs) and Uniform Transfer to Minor Act Accounts are ways to set aside funds for children.
Planning for the unexpected is also a good idea. A power of attorney document can be prepared to detail how your health will be managed in the event of incapacitation. A separate power of attorney can be drawn up to specify a person to manage your finances. It is also a good idea to appoint a guardian you trust to care for your children if something prevents both you and your spouse from being able to care for them. Similar provisions can be made for care of surviving pets.
Middle Years
Financial and estate planning during these breadwinning years go hand in hand. Consistent contributions made to an individual retirement account (IRA) or equivalent will enable you to have options when you retire. Establishing a revocable living trust and a pour-over provision in your will can provide for assets to be moved upon death. This allows for quicker distribution of assets and minimizing transfer and probate costs. Try to make sure your parents have performed responsible and appropriate estate planning and consider purchasing long-term care insurance for them. This could help reduce or avoid nursing home costs in the future.
Golden Years
When a spouse passes, their surviving spouse receives a financial benefit called a stepped-up basis on their assets. When the assets are later sold, the capital gain tax is significantly reduced, if not eliminated. A good advisor can help you determine how to provide for surviving children without losing this benefit. A sizable estate can use gifting to individuals and charities to reduce the amount that will ultimately be subject to estate taxes.
It is important to hire an experienced wills and estates attorney to be sure the estate plan and related documents conform to state legal requirements. Each estate plan will be unique to consider each individual’s specific circumstances, needs, and goals.
Chester County Wills and Estates Lawyers at Eckell Sparks Advise Clients on All Estate Planning Matters
Our experienced Chester County wills and estates lawyers at Eckell, Sparks, Levy, Auerbach, Monte, Sloane, Matthews & Auslander, P.C. help clients at every stage of life perform legacy planning. Contact us at 610-565-3701 or complete our online form to schedule a free consultation. Located in Media and West Chester, Pennsylvania, we proudly serve clients from the surrounding areas, including Delaware County, Chester County, and Montgomery County.