Estate Planning for Executives

As an executive, it’s likely that you’re feeling the pressure of putting together an estate plan. Because of the unique way you may be compensated as an executive, there are details to identify that not everyone else needs to focus on.

Your accumulation of assets is more than likely in a variety of contexts, including real estate, private equity and taxable investment accounts. Because these forms of wealth often come with complexities when transferring finances to your beneficiaries, it’s important to make a conscious effort to properly disperse your wealth. 

What is Estate Planning?

An estate plan clearly defines what should happen with your wealth and physical well-being should you die or become incapacitated. The objectives of such planning often include ensuring your beneficiaries receive most of your estate, paying the least amount of taxes on your estate and assigning guardians to any minor children, if necessary.

What To Prepare

It’s true that every good plan starts from the initial stages of planning, so let’s jump into the basics of what a thoughtfully developed estate plan should consist of:

• Power of Attorney
• Property
• Healthcare
• Will
• Beneficiaries
• Revocable trust
• Guardianship delegations (if applicable) 

Your best option, especially if you have a significant amount of wealth and assets to consider, is to work directly with an estate planning attorney to organize these details. They will assist you in addressing these aspects of your finances, as well as discussing any complicated tax strategies in your plan. 

Focus on Your Taxes

During your lifetime, there are different taxes that you’ll want to keep in mind. For example, the generation-skipping tax is applied in addition to either the gift tax, if you’re still living, or the estate tax, when you’ve passed.1 

One way to avoid the generation-skipping tax is to use 529 plans for your family members by gifting your grandchildren with educational funds. You can use this plan for each child and a five-year multiple of the current gift tax exemption to make a lump-sum contribution.2 

Keep Insurance In Mind

If you have life insurance, it’s important to keep in mind, if the funds are made payable to your estate, they will be subject to any estate tax your other accumulated wealth will eventually be subject to.3 Make sure your beneficiaries are updated on all forms of insurance in order for the proceeds to go straight to them when the time comes. We often see this important step missed, which is why we recommend working with a Family CFO, like Buttonwood, to proactively review and work to implement changes as needed.

You’re Not Alone

Estate planning can be difficult for anyone, let alone an executive such as yourself. Make sure you take the time to have conversations with family and financial professionals regarding how to go about it efficiently. The last thing you would want is a large portion of your estate taxed at incorrect (higher) rates. Developing a plan with an advisor that addresses your estate and legacy after you’re gone can be hugely beneficial for you and your loved ones.

1. https://www.irs.gov/instructions/i706gst
2. https://www.investopedia.com/articles/managing-wealth/072516/why-you-should-front-load-your-529-plan.asp
3. https://www.investopedia.com/articles/pf/06/transferlifeinsurance.asp

This content is developed from sources believed to be providing accurate information. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.