Estate Planning and You: Preserving Your Legacy

There is a lot that we like to think about in life and a lot that we don’t. For example, it is easy to think about when we are going to go to Disney World next, but it is not as easy to think about what happens when we die. Too many times, I have seen families put a will in place and forget it is there, but not take the steps to solidify what the will is going to protect.

Your will tells your money where to go, but what if there wasn’t any money left to direct?

This is where estate planning comes into play. Not only do we need to tell your money where to go, but we have to ensure there is money left to be moved.

The Background...

  • At death, an individual’s estate faces inevitable depletion from final expenses, taxes, and costs associated with disposing of the estate—especially when the individual made no effort to minimize these costs.

  • One set of costs is triggered by death itself—unreimbursed end-of-life medical expenses, funeral and burial costs, and unpaid debts that remain after death.

  • Expenses are also incurred during the orderly administration of an estate. Typically referred to as probate fees, these expenses potentially include attorney’s fees, executor’s fees, appraiser’s fees, court costs and other probate expenses.

  • For very large estates, the federal estate tax can be the most burdensome expense. A few states also impose their own estate and/or inheritance taxes.

Closer Look...

  • In 2018, estates that exceed the federal estate tax applicable exclusion of $11.18 million will be subject to tax. The estate tax rate in 2018 is 40%.

  • It helps to see how the combination of the federal estate tax and estate settlement costs can reduce an estate intended for heirs. The example below assumes no taxable gifts during life and a gross estate valued at $20,000,000.

    Let’s take a look…

Gross estate: $20,000,000

  1. Final expenses & debts : -$720,000

  2. Probate costs: -$720,000

  3. State estate tax: -$1,600,000

  4. Federal estate tax (2018): -$2,312,000

Balance left for non-spouse heirs: $14,648,000

■ In this case, roughly 25% of the original estate is lost before it can go to the heirs. These numbers are realistic estimates and may actually be more or less for an estate.

Bottom Line...

Estate owners can take action to ease the financial problems associated with death. Minimizing estate shrinkage is the purpose of an estate review with a qualified advisor. Reaching decisions about property ownership, transferring assets, establishing trusts and making other arrangements can fulfill the individual’s wishes and, often most important, mitigate the effects of taxation.

You have worked hard for the legacy you have built. Now, preserve it.

If you would like to talk in detail about how to preserve your estate, whether $20,000,000 or $200,000, reach out below for a free consultation to find out what might be right for you.

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About the Author: Grant J. Reynolds

Grant is an innovator, marketing fanatic, entrepreneur, and pastor. He is a proud Agency Owner with Symmetry Financial Group and most recently founded The Family Protection Group to preserve the legacies of families. He lives with his wife, Nicolette, and their two dogs in Norfolk, VA.