E14: Beyond Beneficiaries: A Helpful Guide into Estate Planning

Wealth Well Done

As individuals with wealth, it's important to recognize our responsibility to use our resources for the greater good. Join us today for a conversation about cultivating humility and giving back through philanthropy and service. Let's work together to create a culture of generosity and gratitude. In today's session, we'll be providing an overview of estate planning.

Please note that this program is solely meant for educational and informational purposes. It should not be considered investment advice, and we strongly recommend seeking the guidance of a financial advisor to assess the most suitable options based on your specific situation. Furthermore, please be advised that none of the statements made in the program should be taken as legal or tax advice.

Here are some topics from today’s discussion:

• The difference between a living trust and a will
• The importance of giving the trustee discretion
• How to choose your beneficiaries
• The irrevocable and revocable aspect of your trust
• What goes into the distribution of the assets
• The importance of controlling your children’s wealth

Episode Highlights:

[02:57] A Will vs. a Living Trust

When it comes to estate planning, a will is a popular option as it outlines instructions for asset distribution, powers of attorney, and guardianship. However, the probate process that follows can be costly, with creditors making claims against the estate before assets are distributed according to the will's directives. In contrast, a trust may come with higher upfront costs, but long-term savings often justify the expense. A trust allows for immediate asset transfer without probate fees or delay and remains private and confidential. While a will may seem like an affordable option initially, the benefits of a trust may outweigh the costs in the long run. It's important to consider your individual needs and consult with a financial advisor when making estate planning decisions.

[12:31] How to Choose Your Beneficiaries

When choosing beneficiaries and a trustee for your estate plan, it's important to remember that charities can also be included. The trustee selection is vital and should be someone financially competent with high literacy or an entity with clear guidelines. It's crucial to discuss fees upfront, especially if naming an individual as the trustee, ensuring compensation for their legal work while considering dependents' guardianship.

[29:21] The Irrevocable and Revocable Aspect of Your Trust

Understanding the irrevocable and revocable aspects of your trust is crucial when dealing with state estate taxes. The current federal limit for 2023 is $12.92 million per individual, or $25.84 million per married couple, allowing for tax-free transfer of assets in and out of your estate. However, anything exceeding this limit is taxed at a graduated rate between 18% and 40%. The federal government receives the state tax rate for amounts above the $12.92 million threshold. In addition to federal estate taxes, 13 states have their own estate taxes based on limits varying from over a million dollars to over $13 million, with some states applying low tax rates.

[39:01] Controlling Your Children’s Wealth

Being born into a wealthy family brings many advantages, but it also carries an important responsibility. As stewards of the resources that we have been given, it is essential to approach our privilege with humility. For those who have grown up in immense wealth, this can be a difficult task. However, it is crucial to cultivate a sense of gratitude and recognize that our wealth is not just for personal gain, but also for the benefit of others. Through philanthropy and service, we can use our resources to make a positive impact on the world around us. Let's strive to create a culture of humility rather than entitlement among the children of the wealthy.