I’m a Financial Advisor: Here’s What I’m Doing With My Estate Plan

According to a survey published by LegalShield, 90% of all Americans surveyed agreed that having an estate plan in place is essential, yet only 40% actually have a will or trust put into place should the unthinkable happen. It’s also important to note that estate laws vary from state to state, which has the potential to make settling one’s estate even harder.

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Inheritance also gets trickier if you have multiple family members who stand to benefit from receiving your assets. GOBankingRates spoke with Steve Reder, managing director of wealth management at RWA Wealth Partners , to find out what he’s doing with his estate plan and how he plans to keep it fair .

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How Will You Distribute Your Assets to Your Heirs (Equally vs. Varied Amounts)?

When asked how he will distribute his assets, Reder said he will be doing so equally rather than in varied amounts.

“Equally. I have seen how money can tear a family apart. While there is no silver bullet, and issues can still arise, I feel like an equal split gives the best chance of success of not turning a blessing into a curse,” Reder said.

This means that as his family grows, he’ll be reassessing his estate plan to make sure that each of his children is taken care of by inheriting the same amount. He believes this approach will keep the odds in his family’s favor once he’s gone, and there will be no hurt, shock or resentment. While he does plan on gifting to his future grandchildren, they aren’t in the picture yet but will be added once and if they are.

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What Measures Are You Taking To Minimize Tax Liabilities?

“Taking advantage of the gift limits can go a long way to transferring assets tax-free,” Reder said. According to the IRS, the annual gift exclusion for 2024 is $18,000, with an estate tax exemption of up to $13.61 million. Taking advantage of tax breaks can help your estate go further when it comes to your family inheriting what is rightfully theirs.

Something else Reder said people underutilize regarding estate planning is 529 accounts. “This is an extremely tax-efficient way to both fund education and also help with estate planning. Especially since you can super-fund these, and they now have Roth conversion capabilities,” he said.

The Secure Act 2.0 allows a beneficiary of a 529 fund the chance to roll over unused funds to a Roth IRA so that no money is left on the table.

Are You Opting for a Will, a Trust or Both?

“Both. Trusts are your best bet to make sure that assets are transferred precisely as you intended,” Reder said. “Trusts can also account for things like making sure my minor children are appropriately taken care of, factoring in things like guardianship, where they will live, and ensuring my finances are used appropriately for their expenses and when they are old enough, they appropriately get access to the money.”

Leveraging a trust can also help you build generational wealth and allow you to gift earlier if you change your mind about the timing of your distributions.

If you have less formal needs, Reder suggested a will as a good option. In fact, he is currently using one for paintings he inherited from his grandfather and other family heirlooms he plans to pass on.

“This is another way to spell out your intentions so that things go as smoothly as possible when settling your estate,” he said. Knowing who is supposed to receive what when it’s time can allow your family more space to grieve without feelings of resentment.

Last Thoughts

“It is important to keep both wills and trusts up to date and aligned. Even though the trust will likely trump the will, if they say different things, it increases the risk of family fighting,” Reder said.

Once a year, go over your trust and will with an estate attorney to make sure your plans are current so that nothing is left to question when it’s your turn to go. If your assets don’t change too often, you can likely get away with updating them every few years instead.

“Nothing gives me more peace of mind than knowing that if something happens to my wife and me, my children are in the best situation possible given the circumstances,” Reder said.

This article originally appeared on GOBankingRates.com : I’m a Financial Advisor: Here’s What I’m Doing With My Estate Plan