The Importance of Estate Planning Carmichael Hill

It’s not easy to think about what’s next for all the assets and items that will outlive you. Perhaps you’ve been deferring the creation of a solid plan because the idea makes you uncomfortable. Or perhaps you don’t think you have a lot of wealth and believe that an estate plan isn’t required.

You don’t need to have a billion-dollar fortune to establish an estate plan. It’s quite the contrary. Your lifelong accumulated assets can serve as financial aid for your family and the next generation. At the end of the day, an estate plan is about helping your wishes stay intact and helping your family understand and execute those wishes. Not only can this provide peace of mind, but it can also keep your legacy intact for generations to come, providing one of the greatest, longest-lasting gifts you could possibly give. But you might be thinking, “What’s the difference between having and not having an estate plan?”

What Happens Without an Estate Plan

In the absence of a detailed strategy, your legacy could become a complex, time-consuming, and possibly expensive matter for your successors to handle.[1] If you haven’t established specific arrangements, then your assets will flow to others according to the laws of intestacy in your state. Probate courts will dictate the allocation of your possessions. If you haven’t written a will or set up a trust, then you’ll use the will the state has picked for you. It probably isn’t what you want.

This is especially true for blended families, where assets may flow directly to children from a previous marriage or a current spouse in ways that weren’t intended. There could be contentious, costly, and time-consuming debates about how exactly to split what you want to pass down to your heirs.[1] Their methods of distribution might not be what you had in mind and could be settled in a manner that you think is unfair.[1]

For example, should all your kids inherit equal shares in your business? What if only one of them can realistically run it? What if you want your spouse to use your savings for their retirement after you pass away while leaving whatever remains for your kids from a previous marriage? That structure requires advanced planning.

Estate plans help by allowing precise control over how your assets are disseminated.[1] Not only do they tailor asset distribution according to your desires, but they also simplify proceedings so that those inheriting don’t have to endure prolonged court procedures deciding how everything is divided up amongst them.[1] (Hopefully, anyway).

Tax Benefits of Estate Planning

Another compelling reason to construct an estate plan is the tax-minimization benefits that come with proper planning. A well-crafted estate plan can potentially facilitate a distribution of your assets that lessens the amount of taxes your beneficiaries would be required to pay upon receiving their inheritance.[1] This may mean lessening the impact of income taxes on your tax-deferred assets or taking steps to avoid estate and inheritance taxes at the state and federal levels.

It’s important to note that each circumstance varies, and proper estate planning won’t automatically lower your heirs’ tax burden. However, in certain financial scenarios, an effective estate plan could allow you to strategically lower the tax obligation imposed on the inheritors of your wealth.[1]

Numerous elements contribute to financial planning, with estate planning being a single component within the broader fiscal landscape and your unique financial circumstances. If you’re in search of guidance on how to optimize the distribution of your wealth at your passing, then give us a call. We help people think through and solve these kinds of challenges all the time, and we can help you, too.

 

REGULATORY DISCLOSURE

Carmichael Hill & Associates, Inc. is a U.S. Securities and Exchange Commission Registered Investment Advisory firm. Registration does not imply that the SEC has endorsed or approved the qualifications of Carmichael Hill or its respective representatives to provide any advisory services. Advisor does not render or offer to render personalized investment advice or financial planning advice through this medium. Advice can only be given after:

  1. Delivery of a disclosure statement by advisor to client.
  2. Execution of our Investment Advisory Agreement between the client and the advisor.
  3. Initial payment of the planning fee or investment advisory fee by the client to the advisor.
  4. Advisor will not solicit or accept business in any state in which she or he is not properly registered or otherwise qualified to conduct business by virtue of a state “de minimis” exemption.
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The information in this web site is based on data gathered from what the Advisor believes are reliable sources. It is not guaranteed as to accuracy, and does not purport to be complete and is not intended as the primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. The identification of specific funds and model portfolios is being made on the assumption that the investor would participate in that investment or portfolio on a long-term basis and only after consulting with their investment advisor to determine their needs and tolerance for risk. With respect to any such identification, there can be no assurance that the fund or model portfolio will in fact perform in the manner suggested.

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All references that might be made to an investment or portfolio’s performance are based on historical data and one should not assume that this performance will continue in the future.

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