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Estate Planning Checklist For High-Net-Worth Individuals

Formulating an estate plan can be daunting, but the process can add tremendous value to your overall wealth strategy, reinforcing your financial peace of mind and ensuring your legacy. To help guide your estate planning process, we have developed an estate planning checklist, organized into 4 key steps.

1. Map Out Your Finances And Decide On Future Distributions

  • Formulate your personal balance sheet including all assets and liabilities, both in present value (what they’re worth today) and future value (what they’ll be worth at a future date using reasonable assumptions).
  • Account for the proceeds of all existing insurance policies which will add to your estate.
  • Complete a retirement planning exercise (if you haven’t yet) to understand what portion of your wealth is needed for use during your lifetime and what will be surplus to this and will therefore form part of your estate.
  • Reflect on your values and wishes for the people and causes closest to you, to work out how to allocate your surplus wealth to form your legacy.
  • If you are a business owner, review your succession plan to understand how it fits with your estate plan and ensure it remains viable (i.e. Is there a buy-sell agreement in place? If the family is to carry on the business, will there be sufficient liquidity to assist in the transition?).

2. Assess And Account For Future Tax Liabilities And Fees

  • The wealth that forms your legacy may be subject to erosion from taxes, depending on the assets in question—you may wish to consult with a tax and/or legal professional to assess your future tax liabilities and estate fees to quantify the probable estate shrinkage.
  • Some assets may be more exposed to such erosion of wealth than others, so you may need to do some planning for equalization purposes to ensure the desired impact of your legacy on each beneficiary and philanthropic cause is not diminished.
  • You may wish to consult with an insurance professional as life insurance policies can be a powerful tool to provide estate liquidity as well as to equalize bequests to beneficiaries that may be disproportionally reduced by tax in the future.
  • If you have philanthropic legacy goals, you may also wish to consult with a professional advisor specializing in strategic philanthropy. Gifts can be structured both during your lifetime and at the time of your passing to nullify, if not eliminate, certain tax liabilities while also optimizing the size and impact of your gift.

3. Ensure Proper Documentation Is In Place

  • To direct your distributions, you will need to ensure that you have a valid will and that it reflects your current reality and your wishes.
  • If you have assets in foreign jurisdictions, or assets that will not be subject to probate, you may wish to consider using multiple wills to ensure that directions can be properly executed, or that fees can be avoided where possible.
  • You should consider preparing Powers of Attorney which can provide for continuity in both your care and finances such that your family, business, and wealth planning do not suffer a damaging disruption in the event that you become incapacitated during your lifetime.
  • If your legacy plans involve the use of a trust, you may wish to review the agreement to ensure that its stipulations remain appropriate and reflect your current wishes.
  • You should ensure that your appointed executors and attorneys will have access to all necessary passwords for digitally-recorded assets or arrangements in order for them to carry out their duties.

4. Review Key Appointments: Beneficiaries, Trustees, Attorneys, and Executor(s)

  • Your wishes, along with the financial and living situations of your beneficiaries, may evolve over time, so you should regularly review your beneficiary appointments and allocations across all registered accounts and in your will(s).
  • Your should also regularly review your appointed Trustees, Attorneys (i.e. Named in Powers of Attorney documents), and Executor(s) to ensure that the appointments are still appropriate and that personal or family developments will not prevent them from carrying out their duties as prescribed (particularly true for Named Attorneys as these appointments and their actions, if called upon, will impact you during your lifetime).
  • In the case of cross-border planning, you may also wish to review legislation in the foreign jurisdictions involved to ensure that named roles are in compliance with local laws and will be able to act in their full capacities.

A well-prepared estate plan will involve legal documents such as wills, wealth and insurance strategies, tax strategies, trusts of various types and Powers of Attorney. With this complexity, it is important to consult with professional advisors in the appropriate fields to ensure that no potential pitfalls are overlooked and no opportunities to add value or reduce tax liabilities are missed.

At Bloom Investment Counsel, Inc., we take pride in collaborating across professional disciplines to ensure that all wealth planning, protecting, and building strategies benefit from a cohesive and coordinated approach to preserve and grow enduring wealth.

This content is provided for general informational purposes only and does not constitute financial, investment, tax, legal or accounting advice nor does it constitute an offer or solicitation to buy or sell any securities referred to. Individual circumstances and current events are critical to sound investment planning; anyone wishing to act on this content should consult with his or her financial partner or advisor.

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